# Use MINITAB and the following information to answer question. To find out whether there is a relationship

## Question:

Use MINITAB and the following information to answer 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 collect information on the debt/equity ratio and return on assets for the “big three” automakers and the average for the auto industry.

Redo question 51 using the data for the auto industry.

**Question 51**

Suppose you believe that in addition to there being a relationship between the return on assets and the debt/equity ratio, the return on assets in the previous period may also play an important part in determining the return on assets in the current period. You estimate the equation:

**(a)** Use the data for Chrysler to estimate the foregoing equation.

**(b)** Compare your results to the simple regressions you computed in question 42.

**Question 42**

Estimate the regression of Chrysler’s return on assets against its debt/equity ratio. Compute the Durbin–Watson statistic. Does autocorrelation exist?

## Step by Step Answer:

**Related Book For**

## Statistics For Business And Financial Economics

**ISBN:** 9781461458975

3rd Edition

**Authors:** Cheng Few Lee , John C Lee , Alice C Lee