One of the standard assumptions of the linear regression model is that the variance of the error terms is equal to one.

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The variance of the error terms, also known as the residual variance or the disturbance variance, is not assumed to be equal to one in the linear regression model. In fact, the variance of the error terms is one of the parameters estimated by the model, and it can be different for different datasets and different applications. The assumption of constant variance does exist, where the variance of the error terms is assumed to be constant across all values of the independent variable(s). However, this assumption can be relaxed or tested using diagnostic plots and statistical tests.

One of the Standard Assumptions of the Linear Regression Model