The following are all least squares assumptions with the exception of: A)The conditional distribution of u_i given X_i has a mean of zero. B)The explanatory variable in regression model is normally distributed. C)(X_i, Y_i), i = 1,..., n are independently and identically distributed. D)Large outliers are unlikely.

Question

Quizplus · Accepted Answer

The least squares assumptions are:
1. Linearity and additivity of the relationship between dependent and independent variables.
2. Independence of the errors or residuals.
3. Homoscedasticity (constant variance) of the errors.
4. Normality of the error distribution.
Option B is not a least squares assumption, as the explanatory variable can be non-normal, but the error distribution needs to be normal.

The Following Are All Least Squares Assumptions with the Exception