ABSTRACT
Homoscedasticity implies that, the variance of disturbance term µi conditional for all the observations of an independent variable is some finite constant number equal to σµ2. The variance of each disturbance termµi, conditional on the chosen values of the independent variables, is some constant number equal to σµ2. This concept of homoscedasticity is one of the important assumptions of Classical Linear Regression Model (CLRM). If this assumption is not valid, we can say that, µi’s are heteroscedastic.
