Question: To find out whether there is a relationship between the amount of financial leverage a firm uses and the return on the firm's assets, you
To find out whether there is a relationship between the amount of financial leverage a firm uses and the return on the firm's assets, you collect information on the debt/equity ratio and return on assets for the "big three" automakers and the average for the auto industry. Estimate the regression of Fords's return on assets against its debt/equity ratio. Compute the Durbin-Watson statistic. Does autocorrelation exist?
| de_ratio | roa |
| 0.76 | 0.06 |
| 0.81 | 0.05 |
| 0.89 | 0.06 |
| 0.95 | 0.07 |
| 1.02 | 0.07 |
| 1.27 | 0.03 |
| 1.21 | 0.02 |
| 1.22 | 0.06 |
| 1.28 | 0.09 |
| 1.28 | 0.07 |
| 1.26 | 0.05 |
| 1.84 | -0.06 |
| 2.13 | -0.05 |
| 2.61 | -0.03 |
| 2.16 | 0.08 |
| 1.79 | 0.11 |
| 1.58 | 0.08 |
| 1.55 | 0.09 |
| 1.43 | 0.10 |
| 5.66 | 0.04 |
| H0: | ? |
| Ha: | ? |
| test statistic | ? |
| d_l | ? |
| d_u | ? |
| decision | ? |
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