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:

Bonds Mature

The point in time when a bond's principal amount is due to be paid back to bondholders, ending the bond's life.

Straight-Line Method

The straight-line method is a depreciation technique that allocates an even amount of depreciation expense over the useful life of an asset.

Amortization of Bond Discount

The gradual reduction or write-off of the difference between the face value and the lower issuing price of a bond over its term, impacting the issuer's financial statements.

Interest Expense

The financial obligation incurred from borrowing money over a set time frame.