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Given your success in applying econometric techniques within the financial markets, the University of Wollongong in Dubai offers you a position as a professor within

Given your success in applying econometric techniques within the financial markets, the University of Wollongong in Dubai offers you a position as a professor within their Business School. However, before finally signing the contract, they ask you to answer some theoretical questions:

(a) What is Heteroscedasticity?(3 marks)

(b)Discuss how the White's test for Heteroscedasticity can be conducted to find out the presence of Heteroscedasticity? (Explain the procedure).(8 marks)

(c) What are the consequences of ignoring the heteroscedasticity?

(3 marks) (d)Why is it important that the error terms are normally distributed?

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