Exercise 3 answer of Dennehy CFA Mock (Quantitative Methods) states:
The value of the Durbin–Watson statistic is given in Exhibit 1 as 1.890. The critical values are given as 1.63 and 1.72. Because the value (1.890) exceeds the upper critical value (1.72), the Durbin–Watson test fails to reject the null hypothesis of no positive serial correlation.
Shouldn’t it be the opposite? Because 1.89 > 1.72 shouldn’t we reject Ho??
Positive serial correlation if DW (given) is < d1 (lower).
If DW is between d1 and du (upper) test is inconclusive.
If DW is > du (upper) no positive serial correlation.
Negative serial correlation happens at extremely high DW values.
In line with Flashback…
When the DW stat is greater than the critical range, presence of positive serial correlation assumption is relaxed, but reverse will be the opposite, and if the number falls between the upper and lower critical stat, then the conclusion becomes inconclusive.