**Unformatted text preview: **Assumption number 2 holds because Ei, and Ej are uncorrelated. We took a random sample meaning all of those E’s are independent of each other. If they are independent, they are uncorrelated Assumption # 3 says that the variance of Ei given Xi = V[Ei] = sigma 2 It holds because sigma 2 = 1 Assumption # 4 says E ~ N(0,1) It holds because we generated the population...

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