If a residual series is negatively autocorrelated, which one of the following is the most likely value of the Durbin Watson statistic?
A) Close to zero
B) Close to two
C) Close to four
D) Close to one.

Question

Quizplus · Accepted Answer

When a residual series is negatively autocorrelated, the Durbin Watson statistic tends to be close to four. This is because the Durbin Watson statistic is designed to detect the presence of autocorrelation in the residuals from a regression analysis, with values near 2 indicating no autocorrelation, values significantly less than 2 suggesting positive autocorrelation, and values significantly greater than 2 indicating negative autocorrelation.

If a Residual Series Is Negatively Autocorrelated, Which One of the Following