CFA Practice Question

There are 208 practice questions for this study session.

CFA Practice Question

Which of the following are NOT assumptions of linear regression?

I. There is a linear (straight line) relationship between the dependent variable Y and the independent variable X.
II. The independent variable, X, is not random.
III. The expected value of the error (residual) term is 0.
IV. The variance of the error term is the same for all observations.
V. The residuals are independently distributed.
VI. The error term is normally distributed.
Correct Answer: None of the above

User Contributed Comments 5

User Comment
wtwaf memory work?
DariSH What about 2? is it an assumption? really?
ericczhang Well that's a particularily strong assumption that's really only true in stuff like medical testing.
ybavly what about 3? what does that even mean?
jpowers Three means the expected difference between the observed value and the predicted value is zero.
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