SCENARIO 13-5
The managing partner of an advertising agency believes that his company's sales are related to the industry sales.He uses Microsoft Excel to analyze the last 4 years of quarterly data with the following results:

-Referring to Scenario 13-5,the partner wants to test for autocorrelation using the Durbin-Watson statistic.Using a level of significance of 0.05,the decision he should make is:
A)there is evidence of autocorrelation.
B)the test is unable to make a definite conclusion.
C)there is no evidence of autocorrelation.
D)there is not enough information to perform the test.

Question

SCENARIO 13-5
The managing partner of an advertising agency believes that his company's sales are related to the industry sales.He uses Microsoft Excel to analyze the last 4 years of quarterly data with the following results:

-Referring to Scenario 13-5,the partner wants to test for autocorrelation using the Durbin-Watson statistic.Using a level of significance of 0.05,the decision he should make is:
A)there is evidence of autocorrelation. 
B)the test is unable to make a definite conclusion. 
C)there is no evidence of autocorrelation. 
D)there is not enough information to perform the test.

Quizplus · Accepted Answer

The Durbin-Watson statistic value is 1.905, which falls between the dL and dU values for a significance level of 0.05 and 8 observations. This indicates that there is no evidence of autocorrelation. Therefore, the managing partner should retain the assumption of no autocorrelation in the data.

SCENARIO 13-5 The Managing Partner of an Advertising Agency Believes That His