Question: 1.You are concerned that conditional heteroscedasticity might be present in a regression that you conducted of annual returns on the S&P 500 index against annual

1.You are concerned that conditional heteroscedasticity might be present in a regression that you conducted of annual returns on the S&P 500 index against annual changes in the unemployment rate from 2002 through 2020 (19 observations).

You also conduct a regression of the squared residuals against the annual change in the unemployment rate and find that for the squared residuals regression:

TSS = .009609

SEE = .023742

R² = 0.002785

a.Conduct a test at the level to see if conditional heteroskedasticity is present

b.In view of your answer for a), what needs to be done?

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