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Suppose the classical regression model y = X13 + e, where e ~ N (0, 6214) and 1 2 2 1 —l 2
X: andy= 1 3 5 1 6 7 (i) Find X’X, X’y, and (X’X)'1. Show all your work.
(ii) Find b = (X’XI‘X’y 4
(iii) Find a? = y — XI). Find Zér . Is this sum supposed to be equal to zero? Why?

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