In Order to Examine If the Size of Cash Bonuses

question 34

Multiple Choice

In order to examine if the size of cash bonuses depends on pay scale, data were
Obtained on the average annual cash bonus and the average annual pay for a sample of 20
Companies. A regression model was fit to these data. From its plot of residuals versus
Fitted values shown below, which assumption appears to be violated?

• A) Equal Variance
• B) Linearity
• C) Normality
• D) Independence
• E) None; all appear to be satisfied.