THE NEXT QUESTIONS ARE BASED ON THE FOLLOWING INFORMATION

question 53

Essay

THE NEXT QUESTIONS ARE BASED ON THE FOLLOWING INFORMATION:
Suppose we estimate the regression Y_t = β₀ + β₁x_1t + β₂x_2t + β₃x_3t + β₄x_4t + ε_t using 36 months of data.
-From the regression results we calculate a Durbin-Watson test statistic of 1.03.What can we conclude about the possibility of autocorrelation in this model at α = 0.05?

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Definitions:

9% Bond

A bond that pays an annual interest rate of 9% to its holder.

Current Yield

The annual income (interest or dividends) divided by the current price of the security, often used to measure the return on investment for bonds.

8 ½% Bond

A bond that pays an annual interest rate of 8.5% to its holders.

Yield to Maturity

The total return expected on a bond if held until it matures, considering both interest payments and the capital gain or loss.