Use the Following to Answer the Question(s) Below

question 32

Multiple Choice

Use the following to answer the question(s) below.
A linear regression model was fit to data representing technology adoption over time. The regression output and residual plot appears below.
-It is known that at 1% significance level the critical values for Durbin-Watson statistic are 0.738 and 1.038. The Durbin-Watson statistic indicates

• A) that the residuals are positively autocorrelated
• B) that the residuals are negatively autocorrelated
• C) that the residuals are not autocorrelated
• D) that the test is inconclusive
• E) The Durbin-Watson cannot be used for this model.

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Definitions:

Amortized

The process of paying off a debt over time through regular payments, where part of each payment is applied to the principal amount and part to interest.

Equal Payments

Payments of the same amount made periodically over a certain period of time, often seen in loans or annuities.

Compounded Monthly

Interest calculation method where the interest is added to the principal balance monthly, leading to interest accruing on the previously accumulated interest.

Equal Monthly Payments

Equal monthly payments are fixed payments made each month on a loan or mortgage over a set period of time, designed to pay off both interest and principal gradually.