Consider the following to answer the question(s) below:
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.
-Suppose that for the regression model estimated using the data described, the Durbin-Watson statistic was calculated as 0.5626. Using α = 0.01 we can conclude that
A) There is evidence of positive autocorrelation.
B) There is evidence of negative autocorrelation.
C) There is no evidence of positive or negative autocorrelation.
D) There is evidence of an outlier.
E) The test is inconclusive.

Question

Consider the following to answer the question(s) below:
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. 
-Suppose that for the regression model estimated using the data described, the Durbin-Watson statistic was calculated as 0.5626. Using α = 0.01 we can conclude that
A) There is evidence of positive autocorrelation. 
B) There is evidence of negative autocorrelation. 
C) There is no evidence of positive or negative autocorrelation. 
D) There is evidence of an outlier. 
E) The test is inconclusive.

Quizplus · Accepted Answer

A Durbin-Watson statistic of 0.5626 is less than the lower critical value of 1.548 for α = 0.01, which indicates positive autocorrelation. Therefore, there is evidence of positive autocorrelation in the regression model.

Consider the Following to Answer the Question(s) Below