In a Regression Model, If Variance of the Dependent Variable

question 21

Multiple Choice

In a regression model, if variance of the dependent variable, y, conditional on an explanatory variable, x, or Var(y|x) , is not constant, _____.

• A)the t statistics are invalid and confidence intervals are valid for small sample sizes
• B)the t statistics are valid and confidence intervals are invalid for small sample sizes
• C)the t statistics and the confidence intervals are valid no matter how large the sample size is
• D)the t statistics and the confidence intervals are both invalid no matter how large the sample size is

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Definitions:

Course of Action

A decision plan or set of steps to be followed to solve a problem or achieve an objective.

Contribution Margin

The amount remaining from sales revenue after variable costs are deducted, used to cover fixed costs and generate profit.

Differential Revenue

Differential revenue is the difference in revenue between two alternative decisions or periods, highlighting the potential increase or decrease in income resulting from a chosen action.

Condensed Income Statement

A simplified income statement that presents only key revenue and expense items, ignoring detailed breakdowns.