Answered: The disturbance term in a regression…

Linear Algebra: A Modern Introduction

4th Edition

ISBN:9781285463247

Author:David Poole

Publisher:David Poole

Chapter7: Distance And Approximation

Section7.3: Least Squares Approximation

Problem 31EQ

See similar textbooks

Related questions

Question

The disturbance term in a regression model , captures:

Some determinants of that are left out
Random outside influences on which we cannot model
Errors in the measurement of that cannot be modelled
All of the above

Which of the following statements is correct?

i) We use a t-distribution instead of a normal distribution when the sample size is large enough.

ii) Type II errors is rejecting when it was really true.

iii) OLS minimises the sum of the squared of the vertical distances from points to the regression line.

iv) Log returns are continuously compounded.

(iii) only
(ii) and (iv) only
(iii) and (iv) only
(i), (iii), and (iv) only

Features Features Normal distribution is characterized by two parameters, mean (µ) and standard deviation (σ). When graphed, the mean represents the center of the bell curve and the graph is perfectly symmetric about the center. The mean, median, and mode are all equal for a normal distribution. The standard deviation measures the data's spread from the center. The higher the standard deviation, the more the data is spread out and the flatter the bell curve looks. Variance is another commonly used measure of the spread of the distribution and is equal to the square of the standard deviation.

Expert Solution