In Regression Analysis, Which of the Following Is Not a Required

question 26

Multiple Choice

In regression analysis, which of the following is not a required assumption about the error term $\varepsilon$ ?

• A)The expected value of the error term is one.
• B)The variance of the error term is the same for all values of X.
• C)The values of the error term are independent.
• D)The error term is normally distributed.

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Definitions:

Periodic Inventory System

An inventory system that updates inventory balance and cost of goods sold at the end of an accounting period, not continuously.

Economic Entity Assumption

An accounting principle that states a company and its owner(s) are separate entities for financial reporting purposes.

Expenses

Outflows or other uses of assets or incurrences of liabilities during a period from delivering goods, rendering services, or carrying out other activities.

Proprietorship

A business structure owned by a single individual who is responsible for its liabilities and entitled to its profits.