question archive What is heteroscedasticity? Multiple Choice When the scatter plot of residuals falls in a vertical band
What is heteroscedasticity? Multiple Choice When the scatter plot of residuals falls in a vertical band
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What is heteroscedasticity?
Multiple Choice
- When the scatter plot of residuals falls in a vertical band.
- When the standard errors of the regression coefficients may be underestimated causing the calculated t-ratios to be larger than they should be.
- When the scatter plot of residuals falls in a horizontal band.
- When the error terms in the population regression have a constant variance across all values of the independent variable.
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When the standard errors of the regression coefficients may be underestimated causing the calculated t-ratios to be larger than they should be.
Heteroscedasticity refers to residuals for a regression model that do not have a constant variance making them form a cone like shape on the scatter plot. This can happen when the standard errors of the regression coefficients are underestimated resulting in the calculated t-ratios to be larger than usual.
