Dumb question - QUANT

CFA Level II Quant
#1

What does residual mean?

Example One of the assumptions of multiple regression is that the variance of the residuals is constant across observations.

Example: Heteroskedasiticy occurs when the variance of the residuals is not the ame across all observations in the sample:

THanks!

#2

Residual means Error.

#3

The error term in the regression equation.

#4

When you draw the least-squares best-fit line through your data points, the residuals are the how far each point is above or below that line. The errors, as mentioned above.