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Assumptions of Multiple Regression Model

  • There exists a linear relationship between the dependent and independent variables
  • The expected value of the error term, conditional on the independent variables is zero
  • The error terms are homoskedastic, i.e. the variance of the error terms is constant for all the observations
  • The expected value of the product of error terms is always zero, which implies that the error terms are uncorrelated with each other
  • The error term is normally distributed
  • The independent variables doesn't have any linear relationships between each other

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