Jim Royo, Manager of Billings Building Supply (BBS), Wants to Develop

question 26

Multiple Choice

Jim Royo, Manager of Billings Building Supply (BBS) , wants to develop a model to forecast BBS's monthly sales (in $1,000's) .He selects the dollar value of residential building permits (in $10,000) as the predictor variable.An analysis of the data yielded the following tables. Jim's calculated value for the Durbin-Watson statistic is 1.14.Using $\alpha$ = 0.05, the appropriate decision is: _________.

• A)do not reject H₀: \(\rho\) = 0
• B)reject H₀: \(\rho\) = 0
• C)do not reject H₀: \(\rho\)\(\neq\) 0
• D)the test is inconclusive
• E)reject H₀: \(\rho\) ≠ 0

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Definitions:

Moral Hazard

The situation where one party is more likely to take risks because the negative consequences of the risk will be borne by another party.

Commodity Futures Market

A financial exchange where people can trade commodity futures contracts, which are agreements to buy or sell a specified amount of a commodity at a set price at a future date.

Flood Control System

Infrastructure designed to manage or prevent the adverse effects of floods.

Annual Premium

The amount of money that must be paid per year to maintain an insurance policy or similar financial products.