Explanation:
Statements I and II are valid classical assumptions of the multiple linear regression model. Statement III is incorrect because a key assumption of linear regression is that the relationship between the dependent and independent variables is linear, not non-linear. Statement IV is incorrect because the model assumes that there is NO exact linear relationship (no perfect multicollinearity) between any two or more independent variables.
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Q.73 Which of the following are assumptions of the multiple linear regression model?
I. The error term has an expected value equal to zero and is normally distributed
II. The error for one observation is uncorrelated with that of a different observation
III. A non-linear relationship exists between the dependent and independent variables
IV. The independent variables are random, and there is an exact linear relationship between any two or more independent variables
A
I and II
B
I and III
C
II and IV
D
III and IV