When There Is First-Order Autocorrelation, the Error Term in Period

question 30

Multiple Choice

When there is first-order autocorrelation, the error term in period t is related to the error term in period ________.

• A) t
• B) t + 1
• C) t − 1
• D) t − 2

---

Definitions:

Warranty Obligations

Liabilities recognized by a company to cover the costs of repairs or replacements for products sold within a specified warranty period.

Discount Rate

The interest rate used to discount future cash flows of a financial instrument to present value.

Present Obligation

A duty or responsibility that is expected to be settled in the future, recognized as a liability.