Instruction 12-5
the Managing Partner of an Advertising Agency Believes

Multiple Choice

Instruction 12-5
The managing partner of an advertising agency believes that his company's sales are related to the industry sales.He uses Microsoft Excel's Data Analysis tool to analyse the last four years of quarterly data with the following results:
$\begin{array}{l}\text { Regression Statistics }\\\begin{array}{lll}\text { Multiple R } & 0.802 & \\\text { R Square } & 0.643 & \\\text { Adjusted R Square } & 0.618 & \\\text { Standard Error SYX } & 0.9224 \\\text { Observations } & 16\end{array}\end{array}$
ANOVA
$\begin{array}{lrcccc} & \text { df } & \text { SS } & \text { MS } & \text { F } & \text { Sig.F } \\\text { Regression } & 1 & 21.497 & 21.497 & 25.27 & 0.000 \\\text { Error } & 14 & 11.912 & 0.851 & & \\\text { Total } & 15 & 33.409 & & &\end{array}$

$\begin{array}{lllll}\text {Predictor} &\text {Coef}&\text {StdError}&\text {t Stat}&\text {P-value}\\\text { Intercept } & 3.962 & 1.440 & 2.75 & 0.016 \\\text { Industry } & 0.040451 & 0.008048 & 5.03 & 0.000\\ \\\text { Durbin-Watson Statistic}&1.59\\\end{array}$
-Referring to Instruction 12-5,if the Durbin-Watson statistic has a value close to 4,which assumption is violated?

A) Homoscedasticity.
B) Normality of the errors.
C) Independence of errors.
D) None of the above.