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Method of least squares fits a trend line by minimising
ASum of deviations
BSum of squared deviations
CSum of absolute deviations
DMaximum deviation
Answer & Solution
Correct answer: B. Sum of squared deviations
1. Least squares minimises the sum of squared vertical deviations from the line.
2. Squaring penalises larger errors more heavily and gives a unique optimum.
3. Sum of deviations alone equals zero around the mean.
4. Hence (B) is the criterion.
_Source: Maharashtra Balbharati Std XII Mathematics & Statistics (Commerce), Ch 4 "Time Series", §4.3 ¶§4.3_