Homework 9 Solutions Page 1 of 6 Problem 1 Part ARegression models were run based on different predictors (highest adjusted R squared highlighted in yellow): Predictors:R Sq.Adj. R Sq.Earnings0.3230.297Dividend0.5240.506Payout0.1950.164EarningsDividend0.5300.492EarningsDividendPayout0.5530.497The best model (highest adjust R squared) was: Shareholders = 19,049 + 7,947 * Dividend The same results were obtained using Minitab (see Appendix). Part BThe Durbin-Watson test was performed: DW0.22dU1.48dL1.33n28k1alpha0.05Since DW < dLconclude H1: ρ> 0 thus there is a problem with serial correlation. Graphical inspection of the actual/forecast and error shows that errors tend to be correlated: Shareholders20,00030,00040,00050,0001968197119741977198019831986198919921995YearShareholdersActualForecast
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