Question

An economist wishes to study the monthly trend in the Dow Jones Industrial Average (DJIA). Data collected over the past 40 months were used to fit the model E(Yt) = ?0 + ?1t, where y = monthly close of the DJIA and t = month(1, 2, 3, ..., 40) The regression results appear below: ? = 88 + 0.25t, R² = 0.37, MSE = 144, F = 4.25, Durbin-Watson d = 0.96 Use the value of the Durbin-Watson test statistic to make a statement about autocorrelation of residuals in the regression model above. There is sufficient evidence (using ? = 0.05) to indicate that positive autocorrelation exists. Approximately 98.5 percent of the residuals lie within two standard deviations of their mean 0. There is insufficient evidence (using ? = 0.05) to indicate that positive autocorrelation exists. Since the value lies in the inconclusive region (using ? = 0.05), we need more information before a definite conclusion can be drawn.

          An economist wishes to study the monthly trend in the Dow Jones Industrial Average (DJIA). Data collected over the past 40 months were used to fit the model E(Yt) = ?0 + ?1t, where y = monthly close of the DJIA and t = month(1, 2, 3, ..., 40) The regression results appear below:

? = 88 + 0.25t, R² = 0.37, MSE = 144, F = 4.25, Durbin-Watson d = 0.96

Use the value of the Durbin-Watson test statistic to make a statement about autocorrelation of residuals in the regression model above.

There is sufficient evidence (using ? = 0.05) to indicate that positive autocorrelation exists.
Approximately 98.5 percent of the residuals lie within two standard deviations of their mean 0.
There is insufficient evidence (using ? = 0.05) to indicate that positive autocorrelation exists.
Since the value lies in the inconclusive region (using ? = 0.05), we need more information before a definite conclusion can be drawn.

An economist wishes to study the monthly trend in the Dow Jones Industrial Average (DJIA). Data collected over the past 40 months were used to fit the model E(Yt) = ?0 + ?1t, where y = monthly close of the DJIA and t = month(1, 2, 3, ..., 40) The regression results appear below:

? = 88 + 0.25t, R² = 0.37, MSE = 144, F = 4.25, Durbin-Watson d = 0.96

Use the value of the Durbin-Watson test statistic to make a statement about autocorrelation of residuals in the regression model above.

There is sufficient evidence (using ? = 0.05) to indicate that positive autocorrelation exists.
Approximately 98.5 percent of the residuals lie within two standard deviations of their mean 0.
There is insufficient evidence (using ? = 0.05) to indicate that positive autocorrelation exists.
Since the value lies in the inconclusive region (using ? = 0.05), we need more information before a definite conclusion can be drawn.

Added by Karen B.

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