CFA Practice Question

There are 208 practice questions for this study session.

CFA Practice Question

Which of the following is not an assumption underlying linear regression?

A. Linear relationship implies linearity in the parameters.
B. The explanatory variable is controllable.
C. The underlying distribution of the error terms is standard normal.
Correct Answer: C

The error terms are assumed to be normal with constant variance, which can be different from 1 (standard), and mean 0 (standard).

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mazen1967 standard normal
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