Dec 31, 2019 in Data Science

Which of the following assumptions do we make while deriving linear regression parameters?

  1. The true relationship between dependent y and predictor x is linear
  2. The model errors are statistically independent
  3. The errors are normally distributed with a 0 mean and constant standard deviation
  4. The predictor x is non-stochastic and is measured error-free

A. 1,2 and 3.

B. 1,3 and 4.

C. 1 and 3.

D. All of above.

1 Answer

0 votes
Dec 31, 2019

Solution: D

When deriving regression parameters, we make all the four assumptions mentioned above. If any of the assumptions is violated, the model would be misleading.


Click here to read more about Loan/Mortgage
Click here to read more about Insurance