Loading...
CFA Level 2
Quantitative Methods

Multiple Regression Assumptions on Residuals

Easy Multiple Regression Analysis Model Assumptions

In a multiple regression analysis, certain assumptions about the residuals (errors) must be satisfied for the model to be valid. For a researcher examining the relationship between advertising expenditure (in thousands of dollars) and sales revenue (in thousands of units), the researcher calculates a regression model and finds that the residuals appear to be normally distributed, have constant variance, and are uncorrelated with one another.

Which of the following assumptions about the residuals is being violated if the residuals exhibit a consistent increasing pattern as the value of the independent variable increases?

Hint

Submitted6.3K
Correct4.5K
% Correct71%