Determine When a Linear Model Is Appropriate for Data

Multiple Choice

Determine when a linear model is appropriate for data.
-Monthly closing stock prices for a utility company were obtained from January 2007
Through August 2008. A regression model was estimated to describe the trend in closing
Stock prices over time. What does the plot of residuals below suggest?

A) An outlier is present in the data set.
B) The linearity condition is not satisfied.
C) A high leverage point is present in the data set.
D) The data are not normal.
E) The equal spread condition is not satisfied.