Question #32

of 139 Which of the following statements regarding heteroskedasticity is least accurate? A) Heteroskedasticity may occur in cross-sectional or time-series analyses. B) The assumption of linear regression is that the residuals are heteroskedastic. C) Heteroskedasticity results in an estimated variance that is too small and, therefore, affects statistical inference. Werner Baltz, CFA, has regressed 30 years of data to forecast future sales for National Motor Company based on the percent change in gross domestic product (GDP) and the change in retail price of a U.S. gallon of fuel. The results are presented below. Predictor Coefficient Standard Error of the Coefficient Intercept 78 13.710 Δ GDP 30.22 12.120 Δ $ Fuel −412.39 183.981 Analysis of Variance Table (ANOVA) Source Degrees of Freedom Sum of Squares Regression 291.30 Error 27 132.12 Total 29 423.42