Which of the following assumptions concerning the probability distribution of the random error term is stated incorrectly?
A) The variance of the distribution increases as X increases.
B) The mean of the distribution is 0.
C) The errors are independent.
D) The distribution is normal.

Question

Quizplus · Accepted Answer

The assumption that the variance of the random error term increases as X increases is incorrect. In fact, the variance of the error term is assumed to be constant (homoscedastic) in most regression models.

Which of the Following Assumptions Concerning the Probability Distribution of the Random