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A.Their presence indicates that the standard error of the model is understated and the model is
unreliable.
B. They indicate that the model may be subject to Type I error.
C. They indicate that the residuals are not normally distributed.
D. 1 and 2 above.
E. None of the above.Why are heteroscedasticity, multicollinearity and serial correlation a
problem in regression model reliability?
Solution
ANSWER IS D

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  • 1. A.Their presence indicates that the standard error of the model is understated and the model is unreliable. B. They indicate that the model may be subject to Type I error. C. They indicate that the residuals are not normally distributed. D. 1 and 2 above. E. None of the above.Why are heteroscedasticity, multicollinearity and serial correlation a problem in regression model reliability? Solution ANSWER IS D