15. SLR.5 and variance of the OLS slope parameter Suppose the simple OLS linear

Question

15. SLR.5 and variance of the OLS slope parameter Suppose the simple OLS linear regression model is given as: y = 0 +Ax + u. Although impossible in reality, suppose you know that Var (ar) = 5.5, what does this mean? The error term exhibits heteroskedasticity, and the OLS estimates will be biased. The error term exhibits heteroskedasticity, and the OLS estimates will be unbiased. The error term exhibits homoskedasticity, but you cannot determine whether the OLS estimates will be unbiased. The error term exhibits homoskedasticity, and the OLS estimates will be biased. Given that the assumptions SLR. 1 through SLR.4 hold, and the error term exhibits homoskedasticity with Var (ux) = 2, which of the following represent the variance of Bi? Check all that apply (xi-x)2 1 SST

Explanation / Answer

The correct option is b) because variance is not fixed. But OLS estimates continue to remain unbiased even with heteroskedasticity. The correct option is C ( check formula)

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