Consider the following regression results: t= - 0.17 + 5.26Xt 2 = 0.10, Durbin-Watson = 2.01 t

Question:

Consider the following regression results:
Ŷt= - 0.17 + 5.26Xt 2 = 0.10, Durbin-Watson = 2.01
t = (- 1.73) (2.71)
where Y = the real return on the stock price index from January of the current year to January of the following year
X = the total dividends in the preceding year divided by the stock price index for July of the preceding year
t = time
On Durbin-Watson statistic, see Chapter 10. The time period covered by the study was 1926 to 1982. 2 stands for the adjusted coefficient of determination. The Durbin-Watson value is a measure of autocorrelation. Both measures are explained in subsequent chapters.
a. How would you interpret the preceding regression?
b. If the previous results are acceptable to you, does that mean the best investment strategy is to invest in the stock market when the dividend/price ratio is high?