Page 21 - FINAL CFA II SLIDES JUNE 2019 DAY 3
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LOS 8.j: Formulate a multiple regression equation by READING 8: MULTIPLE REGRESSION AND ISSUES IN REGRESSION ANALYSIS
using dummy variables to represent qualitative factors
and interpret the coefficients and regression results.
MODULE 8.6: ASSUMPTIONS: HETEROSKEDASTICITY
Multiple regression as easy as it look?
Watch-out for 3 assumption violations!
(1) heteroskedasticity,
Exam FOCUS:
(2) serial correlation (i.e., autocorrelation), and • What is each?
• Its effect on regression analysis?
(3) multicollinearity. • How do we detect and correct for it?
LOS 8.f: Explain the assumptions of a multiple regression model.
Recall in LOS 7.e: Explain the assumptions underlying linear regression and interpret regression coefficients (major issue was error term, ε).
If NOT…
