The Proof That OLS Is BLUE Requires All of the Following

question 31

Short Answer

The proof that OLS is BLUE requires all of the following assumptions with the exception of: a. the errors are homoskedastic.
b. the errors are normally distributed.
c. $E \left( u _ { i } \mid X _ { i } \right) = 0$ .
d. large outliers are unlikely.

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Definitions:

Compounded Annually

Interest on an investment or loan that is calculated once a year, where the interest earned each year is added to the principal, so that the balance doesn't merely grow, it grows at an increasing rate.

Equal Annual

A term often associated with the allocation of costs or payments in equal amounts over a specified number of years.

Lump Sum

A single payment made at a particular time, as opposed to a series of periodic payments.

Lump Sum Payment

A single, one-time payment made for a purchase or to settle a debt, as opposed to installments.