Question

The Least Squares Assumptions ​, where 1. The error term has conditional mean zero given ​: ​; 2. ​, are independent and identically distributed​ (i.i.d.) draws from their joint​ distribution; and 3. Large outliers are​ unlikely: and have nonzero finite fourth moments. Suppose the first assumption is replaced with . What happens to ​? A. The slope changes to . B. The intercept changes to . C. Nothing changes. D. Both the intercept and the slope change to and respectively. Are the rest of the OLS assumptions​ satisfied? A. OLS assumption​ (3) is satisfied but not​ (2). B. Both OLS assumptions​ (2) and​ (3) are satisfied. C. OLS assumption​ (2) is satisfied but not​ (3). D. Neither OLS assumption​ (2) nor​ (3) is satisfied.

Answer 1

Step-by-step explanation:

is satisfied but not (3). D. Neither OLS assumption (2) nor (3) is satisfied.