(a) Why is it necessary to assume that the disturbances of a regression model are normally distributed?...

Question:

(a) Why is it necessary to assume that the disturbances of a regression model are normally distributed?

(b) In a practical econometric modelling situation, how might the problem that the residuals are not normally distributed be addressed?

Fantastic news! We've Found the answer you've been seeking!

Step by Step Answer:

Related Book For book-img-for-question

Introductory Econometrics For Finance

ISBN: 9781108436823

4th Edition

Authors: Chris Brooks

See More Books

Question Posted: Jul 23, 2024 09:00 AM

See More Questions

1. Calculate the density of O2, in g/L, at STP. 1.62 g/L b. 0,714 g/L 1.43 g/L. d. 1.14 g/L e. 0.810 g/L a. .
Name, and give an example of, the five dimensions of socially responsible purchasing.
Securimax Ltd. (Securimax) has been an audit client of KFP Partners (KFP) for the past 15 years. Securimax is based in Waterloo, Ontario, where it manufactures high-tech armour-plated personnel...
Accounting for acquisitions of a business and shares in another entity LO6 Major Ltd is seeking to expand its share of the mens products market and has negotiated to acquire the operations of Jack...
Ashton Corporation recently announced a bonus plan to be awarded to the manager of the most profitable division. The three division managers are to choose whether ROI or Rl will be used to measure...
In order to implement good governance practices, the management of a state - owned oil palm plantation company has decided to form a land acquisition department whose task is to acquire land to be...
What might Ramseys RESET test be used for? What could be done if it were found that the RESET test has been failed?
(a) Explain the term parameter structural stability? (b) A financial econometrician thinks that the stock market crash of October 1987 fundamentally changed the riskreturn relationship given by the...
The will of Warren E. Burger, chief justice of the United States from 1969 until 1986, is included. He prepared the will himself. Is it a holographic will? What improvements to his will could you...
1. As resistors are added in parallel to an existing circuit, what happens to the voltage drop measured across each resistor? 2. In the circuit shown on the right, which path (left or right) will...
Can anyone explain me how to calculate the ROI using the HISTORICAL COST NBV, the formula my instructor wants me to use is ADJ CF - HIST DEP /ASSETTOTAL - ACC DEP. And for the ROI of CURRENT COST NBV...
Consider the circuit to the right 3. If the total voltage supply in the circuit is 120V, and each resistor has a resistance of 400, what will the current read on each ammeter? |1= 12= 3 = 4. What...
1. The theory predicts the proportion of beans, in the four groups A, B, C and D should be 9:3:3:1. In an experiment among 1600 beans, the numbers in the four groups were 882, 313, 287 and 118. Does...
Would you recommend criminal charges in this case ( the screenshots below) and, if so, exactly which statutes against which person? Explain your reasoning (how the elements of the crime are met or...
A liquidgas fuel mixture consists of 90 percent octane (C8H18), and 10 percent alcohol (C2H5OH), by moles. This fuel is burned with 200 percent theoretical dry air. Write the balanced reaction...
For each of the following reactions, express the equilibrium constant: a) H20 (I) H2 (g) + 02 (g) Ke = 1.0x107 b) Fe2 (g) 2F (g) Ke= 4.9 x 10-21 c) C (s) + O2 (g) d) H2 (g) + C2H4 (g) C2H6 (g) Ke =...
True or False: Technical, fundamental, and market - based forecasting can sometimes yield contradictory exchange rate forecasts.
Two bonds are given. A 9.3%, 23-year semiannual bond at 112.429 A 11.4%, 26-year semiannual bond at 100.834 Assume that the par value of the bond is $1,000. Which of these two bonds offers the...
Discuss the two main roles of profit plan.

(a) Why is it necessary to assume that the disturbances of a regression model are normally distributed?...

Question:

Step by Step Answer:

Introductory Econometrics For Finance

Students also viewed these Business questions