What Is a Clear Indicator of Non-Constant Variance in a Plot

question 1

Multiple Choice

What is a clear indicator of non-constant variance in a plot of regression model residuals?

• A) A non-linear trend in the residual plot.
• B) An intercept standard error larger that the estimated intercept coefficient.
• C) A funnel shaped trend in the residual plot.
• D) The standard errors from each independent variable differ.

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Definitions:

Net Book Value

The value of an asset after accounting for depreciation or amortization, representing its current worth on the balance sheet.

Investment Centres

Units or divisions within a company that are responsible for making investment decisions and are evaluated based on their return on investments.

Return On Investment

A financial metric used to evaluate the efficiency or profitability of an investment, calculated as the return relative to the investment’s cost.

Residual Income

A measure of performance and profitability calculated as the net operating income after deducting a charge for the cost of capital.