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Regression Model Analysis - Outliers & Normality (2)

The second assumption dictates the normative behavior of the residual error term.  By assumption, the expected value of the error term (e) is zero.  Further, OLS methods assume that deviations from the regression line are normally distributed with a mean of zero (0) and constant error variance.  Stated differently, the residuals are expected to sum to zero.  A normal probability graph should show the residuals in a linear plane (slope is not important).


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