Which of these assumptions indicates homoskedasticity? A)E(e_it)= 0 B)var(e_it)= E(e²_it)= $\sigma$ ² C)cov(e_it,e_js)= E(e_it,e_js)= 0 for i j or t s D)cov(e_it,x_2it)= 0,cov(e_it,x_3it)

Question

Quizplus · Accepted Answer

Homoskedasticity refers to the assumption that the variance of the error terms in a regression model is constant across all levels of the independent variable. Choice B, despite its complex notation, is the only one that directly addresses the variance of error terms being constant, which is the definition of homoskedasticity.

Which of These Assumptions Indicates Homoskedasticity? A)E(eit)= 0 B)var(eit)= E(e2it)= σ\sigmaσ

Which of These Assumptions Indicates Homoskedasticity?
A)E(e_it)= 0
B)var(e_it)= E(e²_it)= $\sigma$