A regression was estimated using these variables: Y= annual value of reported ba

Question

A regression was estimated using these variables: Y= annual value of reported bank robbery losses in all US. banks ($ millions), X = annual value of currency held by all U.S. banks ($ millions), n= 100 years (1912 through 2011). We would not anticipate: Heteroscedastic residuals due to the wide variation in data magnitudes. A negative slope because banks hold less currency when they are robbed. G Autocorrelated residuals due to time-series data. O Nonnormal residuals due to skewed data as bank size increases over time.

Explanation / Answer

Ans:

We would not anticipate the following option: A negative slope because banks hold currency when they are robbed.(second option is correct)

It is a time series, so autocorrelation would be expected, and the"size effect" is likely to produce heteroscedasticity and nonnormality,but growth in both X and Ywould yield a positive slope.

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