Which of the Following Violates the Assumptions of Regression Analysis

question 32

Multiple Choice

Which of the following violates the assumptions of regression analysis?

• A) The error term is normally distributed.
• B) The error term has a zero mean.
• C) The error term is correlated with an explanatory variable.
• D) The error term has a constant variance.

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Definitions:

Credit Sales

Transactions where goods or services are sold to a customer with an agreement to pay at a later date.

Cash Collection

The process of receiving and processing payments from customers.

Revenue Recognition

The accounting principle that determines the specific conditions under which income becomes realized as revenue, often at the time of sale or service delivery.

Gross Profit

The difference between revenue from sales and the cost of goods sold, indicating the amount before deducting operating expenses, taxes, and other charges.