Error Term as the dependent variable- Regression
We assume the following equation that considers the Error Term as the dependent variable and therefore estimated through residual estimation: E = 𝛿0 +𝛿1. K + v
a. Based on OLS simple form, provide a simplified formula to estimate the effect of K on the residual term.
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Order Paper Nowb. If K= (k-k bar)/ Sigma, re-derive after simplification the parameters of the model
Sample Solution
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