please tell me the meaning of classical error term please te

Solution

A classical error term denotes the error margin in a statistical framework, describing the summation of the deviances in the regression line, which gives a clarification for the difference between the outcomes of the framework & the actually noticed outcomes. The regression line is utilized as an analysis point while trying to ascertain the correlation between an autonomous variable & a dependent one

In a linear regression framework which is tracing a stock’s rate over time, the classical error term is the variance between the anticipated rate at a certain time & the rate which was really observed. In cases wherein the rate is exactly what was expected at a certain time, it will be on the trend line & the classical error term is 0.

Points that aren’t directly on the line show the reality that the dependent variable, in this instance the price, is impacted by greater than only the autonomous variable, denoting the progress of time. The classical error term denotes any impact being applied on the price variable, like fluctuations in the market sentiment.

The 2 data points with the maximum gap from the trend line should be an equivalent gap from the trend line, denoting the biggest error margin