FRM-Regression analysis
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FRM-Regression analysis

Postby » Thu Apr 18, 2013 5:10 pm

Properties of regression-It specifies that the dependent variable is a linear function of the parameters,but does not require that there is linearity in the variables .- Can anybody please explain the second part- i find it difficult to understand

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FRM-Regression analysis

Postby lokesh1 » Thu Apr 18, 2013 6:06 pm

Suppose there is a independent variable x and a dependent variable Y. The relation between Y and X is given by: Y = x^3.

Clearly, there is a non-linear relationship between the two variables. In this case also, a regression analysis can be carried out. How???

We can rearrange the given equation as Y = X, where X = x^3. The new transformed relationship can now be easily analyzed using linear regression.

Hope this helps !!!!

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