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CFA Level 2
Quantitative Methods

Independence Assumption in Multiple Regression

Easy Multiple Regression Analysis Model Assumptions

In the context of multiple regression analysis, certain assumptions regarding the model errors are critical for the validity of the regression results. One of these assumptions relates to the independence of the errors. Consider the following statement:

'In a standard multiple regression analysis, the assumption of independence of errors implies that the error terms from one observation must not be correlated with the error terms from any other observation.'

Which of the following statements accurately reflects this assumption?

Hint

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