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    Short description type Questions - Regression

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    A: What is the significance of the error term in the regression equation?

    B: What does zero correlation tell you?

    C: How would you use a histogram to chart residuals? What would this tell you?

    D: How do you identify outliers in your data? How do they impact your regression equation?

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    Solution Preview

    A: What is the significance of the error term in the regression equation?
    We use regression analysis to capture the systematic variations casued by independent variable(s) in dependent variable. However, dependent variable in it self is has got random fluctuations which we can neither measure nor capture by any means. The reason is these variations are just random. To capture these fluctuations we have error term in the regression analysis. For the population the error term should be zero as the disturbances above the population regression line cancels disturbances below the regression line.

    B: What does zero correlation tell ...

    Solution Summary

    There are four short essay type questions related to regression analysis. Answers are in 50-100 words each. Answers are written in a simplified language to give clear idea about concepts.