Question

​Recently, fixed mortgage rates have been at historical lows due to the housing slowdown. The data table linked below shows the​ 30-year fixed average mortgage rate for the month of December every year between 1987 and 2010. Use these data to complete parts a through e below.

Year   Rate_(%)
1987   10.76
1988   10.82
1989   9.87
1990   9.63
1991   8.55
1992   8.24
1993   7.06
1994   7.49
1995   7.02
1996   7.2
1997   6.67
1998   6.39
1999   7.53
2000   7.57
2001   6.52
2002   6.34
2003   6.49
2004   6.29
2005   6.64
2006   6.48
2007   6.29
2008   5.44
2009   5.22
2010   5.01

    k=1   k=1   k=2   k=2   k=3   k=3
n   d L   d U   d L   d U   d L   d U
15   1.08   1.36   0.95   1.54   0.82   1.75
16   1.10   1.37   0.98   1.54   0.86   1.73
17   1.13   1.38   1.02   1.54   0.90   1.71
18   1.16   1.39   1.05   1.53   0.93   1.69
19   1.18   1.40   1.08   1.53   0.97   1.68
20   1.20   1.41   1.10   1.54   1.00   1.68
21   1.22   1.42   1.13   1.54   1.03   1.67
22   1.24   1.43   1.15   1.54   1.05   1.66
23   1.26   1.44   1.17   1.54   1.08   1.66
24   1.27   1.45   1.19   1.55   1.10   1.66
25   1.29   1.45   1.21   1.55   1.12   1.66

a. Forecast the average December mortgage rate in 2011 using a trend projection.

​(Round to two decimal places as​ needed.)

b. Calculate the MAD for this forecast.

​(Round to two decimal places as​ needed.)

c. Determine the Durbin-Watson statistic.

​(Round to two decimal places as​ needed.)

d. Identify the critical values.

dL=

dU=

​(Round to two decimal places as​ needed.)

Answer 1