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A monthly time series of changes in maintenance expenses (ΔExp) for an equipment rental company was fit to an AR(1) model over 100 months. The results of the regression and the first twelve lagged residual autocorrelations are shown in the tables below. Based on the information in these tables, does the model appear to be appropriately specified? (Assume a 5% level of significance.)
A. No, because several of the residual autocorrelations are significant. B. Yes, because the intercept and the lag coefficient are significant. C. Yes, because most of the residual autocorrelations are negative. |