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 at the 0.01 level of significance?

Question

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 at the 0.01 level of significance?

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The Answer of 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 at the 0.01 level of significance?

Monthly Closing Stock Prices for a Utility Company Were Obtained