Residual Term in Regression Analysis

CFA Level II
#1

Why is the disturbance term homoskedastic? I am trying to understand why a constant variance assumes homoskedasticity

#2

A constant variance doesn’t _ assume _ homoskedasticity; a constant variance _ is the definition of _ homoskedasticity.

#3

Without a formal definition, as S2000 said, homoscedasticity means that the variance of the random error term is constant for all settings of the indepdendent variables. Informal word analysis as a memory aid: Homo-same scedasticity- a funky word in statistics to talk about the variance or spread of the errors----> errors have the same variance across all settings of the independent variables!

#4

Thanks guys!

#5

You’re welcome.