CFA Practice Question

There are 208 practice questions for this study session.

CFA Practice Question

If the Durbin-Watson statistic is less than dL, we should:
A. fail to reject the null hypothesis of no positive serial correlation.
B. reject the null hypothesis of no positive serial correlation.
C. fail to reject the null hypothesis of positive serial correlation.
Explanation: If the Durbin-Watson statistic is less than dL, the analyst should reject the null hypothesis that there is no positive serial correlation.

User Contributed Comments 5

User Comment
danlan2 Durbin-Watson statistic for independant variable correlation.
danlan2 D-W statistic is 2(1-r), if it is less than dL,
r is large and we accept the positive serail correlation assumption
richmondo Tricky
chriswwu Sorry, richmondo. It is not tricky. It is the most basic application of Durbin-Watson... exactly like what they said in the explanation.
Rm178234 Why isn't C also correct? If we were running the null hypothesis of positive serial correlation, wouldn't we fail to reject it?
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