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.
a. Based on the plot of residuals versus predicted values, is the linear model
appropriate? Explain.
b. The Durbin-Watson statistic for this regression was found to be 0.5626. What can you
conclude from this statistic? 
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