Homework Answers
DW statistic is 1.5=d
We know that
d=2(1-¶)
Where ¶= correlation coefficient
1.5=2(1-¶)
0.75=1-¶
¶=0.25
Therefore correlation coefficient is 0.25
Ans b)
If error term is heteroskedastic then standard error is incorrect Standard error = Standard deviation / sqrt(sample size) that means we get biased estates
In calculation of t statistic we divide sample estimate by standard error and standard errors are biased hence obtained t values are not correct
Hence statement is False.
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