๐Ÿ“ˆ CFA Exam Prep

Durbin-Watson statistic tests for:

A Normality
B Autocorrelation (serial correlation) in regression residuals
C Multicollinearity
D Heteroskedasticity

โœ“ Correct Answer: Option B

DW statistic near 2 = no autocorrelation. Near 0 = positive autocorrelation. Near 4 = negative autocorrelation.

๐Ÿ’ก Why is B) the correct answer?

The correct answer to the question "Durbin-Watson statistic tests for:" is Option B: Autocorrelation (serial correlation) in regression residuals.

The other options โ€” A) Normality, C) Multicollinearity, D) Heteroskedasticity โ€” are incorrect for this CFA Exam Prep question. As explained above: DW statistic near 2 = no autocorrelation. Near 0 = positive autocorrelation. Near 4 = negative autocorrelation.

๐Ÿ“š About This CFA Exam Prep Practice Question

This 3-level CFA Exam Prep question from the Quantitative Methods topic is part of BrainForge Quiz's free exam preparation library. Each question includes the correct answer and a detailed explanation to help you understand the underlying concept, not just memorize the answer.

How to use this page: Read the question above, consider all four options (A through D), then check the highlighted correct answer and explanation. For active timed practice, start a free CFA Exam Prep practice test or use flashcards for spaced repetition review.

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