which of the statements are true of the residuals in a regression equation? multiple choice question. they measure the impact of firm-specific events. they are not part of regression analysis. they reflect systematic risk. they represent alpha.



Answer :

The residuals in a regression equation measure the impact of firm-specific events.

Residuals = Actual y value  - Predicted y value

Residual analysis is a helpful set of methods for assessing the quality of a fitted model. Checking the underlying assumptions is crucial because most linear regression estimators depend on independent errors with the same distribution and a correctly stated regression function in order to be consistent. Regression is a statistical technique used in finance, investing, and other fields that aim to ascertain the strength and nature of the relationship between a single dependent variable (often represented by Y) and a number of other factors (known as independent variables).

The residuals in a regression equation measure the impact of firm-specific events.

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