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215

**CHAPTER 16: TIME-SERIES FORECASTING AND INDEX NUMBERS
**

1. The effect of an unpredictable, rare event will be contained in the ___________ component. a) trend b) cyclical c) irregular d) seasonal ANSWER: c TYPE: MC DIFFICULTY: Easy KEYWORDS: component factors, properties 2. The overall upward or downward pattern of the data in an annual time series will be contained in the ____________ component. a) trend b) cyclical c) irregular d) seasonal ANSWER: a TYPE: MC DIFFICULTY: Easy KEYWORDS: component factors, properties 3. The fairly regular fluctuations that occur within each year would be contained in the ____________ component. a) trend b) cyclical c) irregular d) seasonal ANSWER: d TYPE: MC DIFFICULTY: Easy KEYWORDS: component factors, properties 4. The annual multiplicative time-series model does not possess _______ component. a) a trend b) a cyclical c) an irregular d) a seasonal ANSWER: d TYPE: MC DIFFICULTY: Easy KEYWORDS: component factors, properties

216

Time-Series Forecasting and Index Numbers 5. Based on the following scatter plot, which of the time-series components is not present in this quarterly time series?

350 300 Stock Returns 250 200 150 100 50 0 0 10 20 30 Quarters 40 50 60

a. b. c. d.

trend seasonal cyclical irregular

ANSWER: c TYPE: MC DIFFICULTY: Easy KEYWORDS: component factors, properties 6. The method of moving averages is used a) to plot a series. b) to exponentiate a series. c) to smooth a series. d) in regression analysis. ANSWER: c TYPE: MC DIFFICULTY: Easy KEYWORDS: moving averages 7. When using the exponentially weighted moving average for purposes of forecasting rather than smoothing, a) the previous smoothed value becomes the forecast. b) the current smoothed value becomes the forecast. c) the next smoothed value becomes the forecast. d) none of the above ANSWER: b TYPE: MC DIFFICULTY: Moderate KEYWORDS: exponential smoothing, properties

Time-Series Forcasting and Index Numbers

217

8. In selecting an appropriate forecasting model, the following approaches are suggested: a) Perform a residual analysis. b) Measure the size of the forecasting error. c) Use the principle of parsimony. d) all of the above ANSWER: d TYPE: MC DIFFICULTY: Moderate KEYWORDS: model selection 9. To assess the adequacy of a forecasting model, one measure that is often used is a) quadratic trend analysis. b) the MAD. c) exponential smoothing. d) moving averages. ANSWER: b TYPE: MC DIFFICULTY: Easy KEYWORDS: model selection 10. Which of the following methods should not be used for short-term forecasts into the future? a) exponential smoothing b) moving averages c) linear trend model d) autoregressive modeling ANSWER: b TYPE: MC DIFFICULTY: Moderate KEYWORDS: moving averages, properties 11. A model that can be used to make predictions about long-term future values of a time series is a) linear trend. b) quadratic trend. c) exponential trend. d) all of the above ANSWER: d TYPE: MC DIFFICULTY: Easy KEYWORDS: least-squares trend fitting, properties

218

Time-Series Forecasting and Index Numbers 12. You need to decide whether you should invest in a particular stock. You would like to invest if the price is likely to rise in the long run. You have data on the daily average price of this stock over the past 12 months. Your best action is to a) compute moving averages. b) perform exponential smoothing. c) estimate a least square trend model. d) compute the MAD statistic. ANSWER: c TYPE: MC DIFFICULTY: Moderate KEYWORDS: least-squares trend fitting, properties 13. When a time series appears to be increasing at an increasing rate, such that the percentage difference from observation to observation is constant, the appropriate model to fit is the a. linear trend. b. quadratic trend. c. exponential trend. d. none of the above ANSWER: c TYPE: MC DIFFICULTY: Easy KEYWORDS: least-squares trend fitting, model selection 14. The method of least squares is used on time-series data for a) eliminating irregular movements. b) deseasonalizing the data. c) obtaining the trend equation. d) exponentially smoothing a series. ANSWER: c TYPE: MC DIFFICULTY: Moderate KEYWORDS: least-squares trend fitting, properties

**15. Which of the following statements about the method of exponential smoothing is NOT true?
**

a) b) c) d) It gives greater weight to more recent data. It can be used for forecasting. It uses all earlier observations in each smoothing calculation. It gives greater weight to the earlier observations in the series.

ANSWER: d TYPE: MC DIFFICULTY: Moderate KEYWORDS: exponential smoothing, properties

It enables us to perform more than one-period ahead forecasting. properties 18. Which of the following statements about moving averages is NOT true? a) b) c) d) They can be used to smooth a series. They give equal weight to all values in the computation.Time-Series Forcasting and Index Numbers 219 16. b) the seasonal component has not been accounted for.2 0 -0. ANSWER: b TYPE: MC DIFFICULTY: Moderate KEYWORDS: exponential smoothing. ANSWER: d TYPE: MC DIFFICULTY: Moderate KEYWORDS: moving averages.8 0. Which of the following is NOT an advantage of exponential smoothing? a) b) c) d) It enables us to perform one-period ahead forecasting.6 -0. After estimating a trend model for annual time-series data. you obtain the following residual plot against time.4 -0. They are simpler than the method of exponential smoothing.6 0. d) the irregular component has not been accounted for. properties 17. 1 0. It enables us to smooth out seasonal components.8 Tim e (Year) 2 4 6 8 10 12 ANSWER: a TYPE: MC DIFFICULTY: Moderate KEYWORDS: component factors . the problem with your model is that: a) the cyclical component has not been accounted for. It enables us to smooth out cyclical components.2 0 -0. c) the trend component has not been accounted for.4 Residuals 0. They give greater weight to more recent data.

a time-series plot) with year on the horizontal X-axis. ANSWER: 500 450 400 350 300 250 200 150 100 50 0 1991 1992 1993 1994 1995 1996 1997 1998 Number of Cases of Wine Year TYPE: PR DIFFICULTY: Easy KEYWORDS: scatter plot .220 Time-Series Forecasting and Index Numbers TABLE 16-1 The number of cases of chardonnay wine sold by a Paso Robles winery in an 8-year period follows: Year Cases of Wine 1991 270 1992 356 1993 398 1994 456 1995 438 1996 478 1997 460 1998 480 19.e. set up a scatter diagram (i. Referring to Table 16-1..

b) represents periodic fluctuations which usually occur in 2 or more years. 1 0. does there appear to be a relationship between the year and the number of cases of wine sold? a) No. ANSWER: c TYPE: MC DIFFICULTY: Easy KEYWORDS: scatter plot. c) the trend component has not been accounted for. After estimating a trend model for annual time-series data. c) Yes. ANSWER: b TYPE: MC DIFFICULTY: Easy KEYWORDS: component factor . there appears to be a slight positive relationship between the year and the number of cases of wine sold by the vintner. The cyclical component of a time series a) represents periodic fluctuations which reoccur within 1 year.Time-Series Forcasting and Index Numbers 221 20. you obtain the following residual plot against time. d) the irregular component has not been accounted for.5 Residuals 0 0 -0. Referring to Table 16-1. the problem with your model is that a) the cyclical component has not been accounted for. c) is obtained by adding up the seasonal indexes. there appears to be a slight negative linear relationship between the year and the number of cases of wine sold by the vintner. component factor 21. d) is obtained by adjusting for calendar variation. b) the seasonal component has not been accounted for.5 -1 Time (Year) 2 4 6 8 10 12 ANSWER: c TYPE: MC DIFFICULTY: Moderate KEYWORDS: component factor 22. b) Yes. there appears to be no relationship between the year and the number of cases of wine sold by the vintner. d) Yes. there appears to be a negative nonlinear relationship between the year and the number of cases of wine sold by the vintner.

The following is the list of MAD statistics for each of the models you have estimated from time-series data: Model MAD Linear Trend 1. d) second order autoregressive model. the most appropriate model is a) linear trend.38 Quadratic Trend 1. Which of the following terms describes the up and down movements of a time series that vary both in length and intensity? a) trend b) cyclical component c) irregular component d) seasonal component ANSWER: b TYPE: MC DIFFICULTY: Easy KEYWORDS: component factor 25.39 AR(2) 0.222 Time-Series Forecasting and Index Numbers 23. ANSWER: d TYPE: MC DIFFICULTY: Easy KEYWORDS: model selection . c) exponential trend.22 Exponential Trend 1. Which of the following terms describes the overall long-term tendency of a time series? a) trend b) cyclical component c) irregular component d) seasonal component ANSWER: a TYPE: MC DIFFICULTY: Easy KEYWORDS: component factor 24.71 Based on the MAD criterion. b) quadratic trend.

5 2 1.4 2 1..e.9 8 2.8 6 1.5 3 2. time-series plot) with months on the horizontal X-axis.5 5 1.1 26. The last 14 months of this time series follows: Month Expenditures ($) 1 1. ANSWER: False TYPE: TF DIFFICULTY: Easy KEYWORDS: least-squares trend fitting .6 4 1.5 1 0.7 7 1.000.8 3 1.8 14 3. set up a scatter diagram (i.9 10 1.2 9 1.9 11 2.4 13 2. Referring to Table 16-2.Time-Series Forcasting and Index Numbers 223 TABLE 16-2 The monthly advertising expenditures of a department store chain (in $1.1 12 2. ANSWER: 3. True or False: Referring to Table 16-2.000s) were collected over the last decade.5 0 0 2 4 6 8 Number of Months 10 12 14 Advertising Expenditures TYPE: PR DIFFICULTY: Easy KEYWORDS: scatter plot 27. advertising expenditures appear to be increasing in a linear rather than curvilinear manner over time.

if a three-term moving average is used to smooth this series.5 c) 54 d) 72 ANSWER: d TYPE: MC DIFFICULTY: Easy KEYWORDS: moving averages 29. Referring to Table 16-3. if a three-term moving average is used to smooth this series. Referring to Table 16-3.224 Time-Series Forecasting and Index Numbers TABLE 16-3 The following table contains the number of complaints received in a department store for the first 6 months of last year. Referring to Table 16-3. how many terms would it have? a) 2 b) 3 c) 4 d) 5 ANSWER: c TYPE: MC DIFFICULTY: Easy KEYWORDS: moving averages. if a three-term moving average is used to smooth this series. what would be the second calculated term? a) 36 b) 40. properties . Month Complaints January 36 February 45 March 81 April 90 May 108 June 144 28. what would be the last calculated term? a) 72 b) 93 c) 114 d) 126 ANSWER: c TYPE: MC DIFFICULTY: Easy KEYWORDS: moving averages 30.

what would be the second term? a) 39 b) 42 c) 45 d) 53 ANSWER: a TYPE: MC DIFFICULTY: Moderate KEYWORDS: exponential smoothing 34. Referring to Table 16-3.Time-Series Forcasting and Index Numbers 225 31. if this series is smoothed using exponential smoothing with a smoothing constant of 1/3. Referring to Table 16-3. if this series is smoothed using exponential smoothing with a smoothing constant of 1/3. Referring to Table 16-3.33 c) 68 d) 81 ANSWER: a TYPE: MC DIFFICULTY: Moderate KEYWORDS: exponential smoothing . if this series is smoothed using exponential smoothing with a smoothing constant of 1/3. what would be the first term? a) 36 b) 39 c) 42 d) 45 ANSWER: a TYPE: MC DIFFICULTY: Moderate KEYWORDS: exponential smoothing 33. what would be the third term? a) 53 b) 65. if this series is smoothed using exponential smoothing with a smoothing constant of 1/3. properties 32. how many terms would it have? a) 3 b) 4 c) 5 d) 6 ANSWER: d TYPE: MC DIFFICULTY: Easy KEYWORDS: exponential smoothing. Referring to Table 16-3.

(Note: they are not. forecasting. forecasting 37.2] b) c) d) [ 0.) What would you forecast as the value of the time series for September? a) 81 b) 86 c) 91 d) 96 ANSWER: d TYPE: MC DIFFICULTY: Moderate KEYWORDS: exponential smoothing.) What would you forecast as the value of the time series for July? a) 81 b) 86 c) 91 d) 96 ANSWER: d TYPE: MC DIFFICULTY: Moderate KEYWORDS: exponential smoothing. (Note: they are not. If you want to recover the trend using exponential smoothing.8] [ 0. you will choose a weight (W) that falls in the range a) [ 0. forecasting 36.0] ANSWER: a TYPE: MC DIFFICULTY: Easy KEYWORDS: exponential smoothing.1. Referring to Table 16-3.226 Time-Series Forecasting and Index Numbers 35.2. suppose the last two smoothed values are 81 and 96.8. 0. 0. Referring to Table 16-3.6. suppose the last two smoothed values are 81 and 96. properties . 0.4] [ 0.

47 billion ANSWER: c TYPE: MC DIFFICULTY: Easy KEYWORDS: autoregressive model. From the data.98541E-05 X Lag 2 -0.655325119 XLag1 1.30047473 0. 11.670448392 38.761721601 -0.250716669 -0.011222533 0.68 billion c) $11.7757 and 11.183028189 0. if one decides to use AR(3).173719587 0.7909.122123515 0.234737881 4.681713257 0. First Order Autoregressive Model: Coefficients Standard Error t Stat p-value Intercept 0.313043288 0.049685158 20.35260757 2.514437257 XLag1 1.730020026 0.069378567 0.246490594 XLag2 -0. t test on slope 39.550890271 0. what is the appropriate AR model for Coca-Cola's real operating revenue? a) AR(1) b) AR(2) c) AR(3) d) any of the above ANSWER: a TYPE: MC DIFFICULTY: Moderate KEYWORDS: autoregressive model. we also know that the real operating revenues for 1996.433014053 p-value 0.Time-Series Forcasting and Index Numbers 227 TABLE 16-4 Given below are Excel outputs for various estimated autoregressive models for Coca-Cola's real operating revenues (in billions of dollars) from 1975 to 1998.373086508 XLag3 -0.000180926 0. and 1998 are 11.4407641 0.474283347 Third Order Autoregressive Model: Coefficients Standard Error Intercept 0.998008229 7.282031297 t Stat 0. Referring to Table 16-4 and using a 5% level of significance. what will the predicted real operating revenue for Coca-Cola be in 2001? a) $11.185958391 -0.59 billion b) $11.503646149 X Lag 1 1.39797154 0.17322186 0.64373E-15 Second Order Autoregressive Model: Coefficients Standard Error t Stat p-value Intercept 0. forecasting . respectively.452815546 0. Referring to Table 16-4.5537. 1997.608515972 4.854678245 0.84 billion d) $12.1802077 0.

the best interpretation of the coefficient of X (0. ANSWER: c TYPE: MC DIFFICULTY: Moderate KEYWORDS: exponential model.228 Time-Series Forecasting and Index Numbers TABLE 16-5 A contractor developed a multiplicative time-series model to forecast the number of contracts in future quarters. Q2 is a dummy variable equal to 1 in the second quarter of a year and 0 otherwise. intercept. d) the fitted value for the first quarter of 1996. is e3. c) the fitted value for the first quarter of 1996.37.083 Q1 + 1. is ln 3. after seasonal adjustment.37 + 0.37. c) the quarterly growth rate in contracts is around 17%. after seasonal adjustment. prior to seasonal adjustment. slope.117) in the regression equation is: a) the quarterly growth rate in contracts is around 11.117 X – 0. interpretation .617 Q3 ˆ where Y is the estimated number of contracts in a quarter X is the coded quarterly value with X = 0 in the first quarter of 1996.7%. the best interpretation of the constant 3.37 in the regression equation is: a) the fitted value for the first quarter of 1996. b) the fitted value for the first quarter of 1996. Referring to Table 16-5. is ln 3. 40. Q1 is a dummy variable equal to 1 in the first quarter of a year and 0 otherwise. d) the annual growth rate in contracts is around 17%. b) the annual growth rate in contracts is around 11. is e3.7%. ANSWER: a TYPE: MC DIFFICULTY: Moderate KEYWORDS: exponential model.37. interpretation 41. The following is the resulting regression equation: ˆ ln Y = 3.28 Q2 + 0. prior to seasonal adjustment. Referring to Table 16-5 .37. using quarterly data on number of contracts during the 3-year period from 1996 to 1998. Q3 is a dummy variable equal to 1 in the third quarter of a year and 0 otherwise.

d) the number of contracts in the third quarter of a year is approximately 85% higher than it would be during the fourth quarter. Q1 = 0. Q3 = 0 b) X = 12. ANSWER: d TYPE: MC DIFFICULTY: Moderate KEYWORDS: exponential model. b) the number of contracts in the third quarter of a year is approximately 62% higher than it would be during the fourth quarter. Q2 = 0. Referring to Table 16-5. Q2 = 0. the best interpretation of the coefficient of Q3 (0. Q2 = 0. Q3 = 0 ANSWER: b TYPE: MC DIFFICULTY: Moderate KEYWORDS: exponential model. Q1 = 1. Q3 = 0 d) X = 13. forecasting . which of the following sets of values should be used in the regression equation? a) X = 15. to obtain a forecast for the first quarter of 1999 using the model. which of the following sets of values should be used in the regression equation? a) X = 12. to obtain a forecast for the fourth quarter of 1999 using the model. slope. Q3 = 0 c) X = 16. Referring to Table 16-5. Q1 = 1.Time-Series Forcasting and Index Numbers 229 42. Q2 = 0. Q2 = 0. Q3 = 0 ANSWER: a TYPE: MC DIFFICULTY: Moderate KEYWORDS: exponential model. Q1 = 0. Q3 = 0 b) X = 15. Q1 = 0. forecasting 44. Q2 = 0. Q1 = 1. interpretation 43. c) the number of contracts in the third quarter of a year is approximately 85% higher than the average over all 4 quarters. Q2 = 0. Referring to Table 16-5. Q1 = 0. Q3 = 0 c) X = 13. Q3 = 0 d) X = 16.617) in the regression equation is: a) the number of contracts in the third quarter of a year is approximately 62% higher than the average over all 4 quarters. Q1 = 1. Q2 = 0.

0000. forecasting 47. forecasting 46.05). t test on slope.05). in testing the coefficient of X in the regression equation (0. interpretation . c) The quarterly growth rate in the number of contracts is significantly different than 100% ( = 0. b) The quarterly growth rate in the number of contracts is not significantly different than 0% ( = 0. conclusion. α α α α ANSWER: a TYPE: MC DIFFICULTY: Moderate KEYWORDS: exponential model. decision. Which of the following is the best interpretation of this result? a) The quarterly growth rate in the number of contracts is significantly different than 0% ( = 0. Referring to Table 16-5. d) The quarterly growth rate in the number of contracts is not significantly different than 100% ( = 0. which of the following values is the best forecast for the number of contracts in the third quarter of 1999? a) 228 b) 252 c) 277 d) 311 ANSWER: c TYPE: MC DIFFICULTY: Moderate KEYWORDS: exponential model. using the regression equation. the results were a t-statistic of 9.05).05).117). which of the following values is the best forecast for the number of contracts in the second quarter of 2000? a) 212 b) 272 c) 592 d) 764 ANSWER: d TYPE: MC DIFFICULTY: Moderate KEYWORDS: exponential model. Referring to Table 16-5.08 and an associated p-value of 0. Referring to Table 16-5.230 Time-Series Forecasting and Index Numbers 45. using the regression equation.

Referring to Table 16-5. properties . ANSWER: True TYPE: TF DIFFICULTY: Easy KEYWORDS: moving averages.05).05).530. in testing the coefficient for Q1 in the regression equation (–0. ANSWER: True TYPE: TF DIFFICULTY: Easy KEYWORDS: component factor 50. Which of the following is the best interpretation of this result? a) The number of contracts in the first quarter of the year is significantly different than the number of contracts in an average quarter ( = 0.Time-Series Forcasting and Index Numbers 231 48. conclusion. t test on slope. there are only seven 9-year moving averages. c) The number of contracts in the first quarter of the year is significantly different than the number of contracts in the fourth quarter for a given coded quarterly value of X ( = 0.05). d) The number of contracts in the first quarter of the year is not significantly different than the number of contracts in the fourth quarter for a given coded quarterly value of X ( = 0. interpretation 49. there are only thirteen 3-year moving averages. the results were a t-statistic of –0. True or False: Given a data set with 15 yearly observations.05). True or False: Given a data set with 15 yearly observations.66 and an associated p-value of 0.083). True or False: Given a data set with 15 yearly observations. b) The number of contracts in the first quarter of the year is not significantly different than the number of contracts in an average quarter ( = 0. properties 51. ANSWER: False TYPE: TF DIFFICULTY: Easy KEYWORDS: moving averages. α α α α ANSWER: d TYPE: MC DIFFICULTY: Moderate KEYWORDS: exponential model. properties 52. ANSWER: True TYPE: TF DIFFICULTY: Easy KEYWORDS: moving averages. a 3-year moving average will have fewer observations than a 5-year moving average. True or False: A trend is a persistent pattern in annual time-series data that has to be followed for several years. decision.

ANSWER: True TYPE: TF DIFFICULTY: Easy KEYWORDS: least-squares trend fitting 55. True or False: The method of least squares may be used to estimate both linear and curvilinear trends. True or False: The principle of parsimony indicates that the simplest model that gets the job done adequately should be used. True or False: If a time series does not exhibit a long-term trend. True or False: MAD is the summation of the residuals divided by the sample size. ANSWER: True TYPE: TF DIFFICULTY: Easy KEYWORDS: exponential smoothing 56. we should perform a residual analysis.232 Time-Series Forecasting and Index Numbers 53. the method of exponential smoothing may be used to obtain short-term predictions about the future. ANSWER: False TYPE: TF DIFFICULTY: Moderate KEYWORDS: model selection 54. ANSWER: True TYPE: TF DIFFICULTY: Moderate KEYWORDS: least-squares trend fitting 57. True or False: In selecting a forecasting model. ANSWER: True TYPE: TF DIFFICULTY: Moderate KEYWORDS: model selection . ANSWER: True TYPE: TF DIFFICULTY: Easy KEYWORDS: model selection 58. True or False: A least squares linear trend line is just a simple regression line with the years recoded.

ANSWER: True TYPE: TF DIFFICULTY: Easy KEYWORDS: model selection TABLE 16-6 The number of cases of merlot wine sold by a Paso Robles winery in an 8-year period follows: Year Cases of Wine 1991 270 1992 356 1993 398 1994 456 1995 358 1996 500 1997 410 1998 376 61. a centered 3-year moving average is to be constructed for the wine sales.Time-Series Forcasting and Index Numbers 233 59. True or False: The MAD is a measure of the average of the absolute discrepancies between the actual and fitted values in a given time series. properties 62. Referring to Table 16-6. properties .33 TYPE: FI DIFFICULTY: Easy KEYWORDS: moving averages. ANSWER: 6 TYPE: FI DIFFICULTY: Easy KEYWORDS: moving averages. ANSWER: 341. Referring to Table 16-6. properties 60. True or False: Each forecast using the method of exponential smoothing depends on all the previous observations in the time series. The result of this process will lead to a total of __________ moving averages. ANSWER: True TYPE: TF DIFFICULTY: Moderate KEYWORDS: exponential smoothing. a centered 3-year moving average is to be constructed for the wine sales. The moving average for 1992 is __________.

0 TYPE: FI DIFFICULTY: Moderate KEYWORDS: moving averages . ANSWER: 420.333 3 398 403.667 7 410 428. Referring to Table 16-6. ANSWER: Period Cases MA 1 270 * 2 356 341. The moving average for 1993 is __________. Referring to Table 16-6. The moving average for 1995 is __________. a centered 5-year moving average is to be constructed for the wine sales. properties 64.234 Time-Series Forecasting and Index Numbers 63.333 4 456 404. The moving average for 1996 is __________. ANSWER: 367. a centered 5-year moving average is to be constructed for the wine sales.6 TYPE: FI DIFFICULTY: Moderate KEYWORDS: moving averages 67.000 5 358 438. a centered 3-year moving average is to be constructed for the wine sales. Referring to Table 16-6. The number of moving averages that will be calculated is __________.667 8 376 * TYPE: PR DIFFICULTY: Moderate KEYWORDS: moving averages 65. ANSWER: 438 TYPE: FI DIFFICULTY: Easy KEYWORDS: moving averages. ANSWER: 4 TYPE: FI DIFFICULTY: Easy KEYWORDS: moving averages 66. construct a centered 3-year moving average for the wine sales.000 6 500 422. Referring to Table 16-6. Referring to Table 16-6. a centered 5-year moving average is to be constructed for the wine sales.

4 6 500 420. The value of E2.2 TYPE: FI DIFFICULTY: Moderate KEYWORDS: exponential smoothing 70.2 will be used to smooth the wine sales. exponential smoothing with a weight or smoothing constant of 0. exponential smoothing with a weight or smoothing constant of 0. forecasting .2 will be used to smooth the wine sales. ANSWER: 380. is __________.0 7 410 * 8 376 * TYPE: PR DIFFICULTY: Moderate KEYWORDS: moving averages 69. ANSWER: 338. is __________. Referring to Table 16-6.2 will be used to forecast wine sales.2 TYPE: FI DIFFICULTY: Moderate KEYWORDS: exponential smoothing. ANSWER: Period Cases MA 1 270 * 2 356 * 3 398 367. Referring to Table 16-6. The value of E4. exponential smoothing with a weight or smoothing constant of 0. Referring to Table 16-6. construct a centered 5-year moving average for the wine sales.7 TYPE: FI DIFFICULTY: Moderate KEYWORDS: exponential smoothing 71.6 4 456 413. The forecast for 1999 is __________.6 5 358 424. Referring to Table 16-6. the smoothed value for 1994.Time-Series Forcasting and Index Numbers 235 68. the smoothed value for 1992. ANSWER: 287.

Referring to Table 16-6.550 6 500 374. Referring to Table 16-6. is __________.4 will be used to smooth the wine sales.7 TYPE: FI DIFFICULTY: Moderate KEYWORDS: exponential smoothing 75.4 will be used to smooth the wine sales. the smoothed value for 1995.236 Time-Series Forecasting and Index Numbers 72.000 2 356 287. forecasting . ANSWER: 304. Referring to Table 16-6.360 4 456 338. is __________. ANSWER: 401. the smoothed value for 1992.040 7 410 381.4 TYPE: FI DIFFICULTY: Moderate KEYWORDS: exponential smoothing 74.2. ANSWER: Time CaseWine Smooth 1 270 270. ANSWER: 375. The forecast for 1999 is __________. Referring to Table 16-6. exponential smoothing with a weight or smoothing constant of 0. The value of E2.4 will be used to forecast wine sales. exponential smoothing with a weight or smoothing constant of 0. exponential smoothing with a weight or smoothing constant of 0. The value of E5.688 5 358 342.200 3 398 309.186 TYPE: PR DIFFICULTY: Difficult KEYWORDS: exponential smoothing 73. exponentially smooth the wine sales with a weight or smoothing constant of 0.95 TYPE: FI DIFFICULTY: Moderate KEYWORDS: exponential smoothing.232 8 376 380.

504 5 358 375. Referring to Table 16-6.253 8 376 401. The smoothed values of the level and trend for 1993 are ______ and ______. ANSWER: 406. ANSWER: Time CaseWine Smooth 1 270 270. the Holt-Winters method for forecasting with a smoothing constant of 0.000 2 356 304. -42.70 TYPE: FI DIFFICULTY: Difficult KEYWORDS: Holt-Winters method .84 TYPE: FI DIFFICULTY: Moderate KEYWORDS: Holt-Winters method 79. 86 TYPE: FI DIFFICULTY: Easy KEYWORDS: Holt-Winters method 78.Time-Series Forcasting and Index Numbers 237 76. the Holt-Winters method for forecasting with a smoothing constant of 0.82.702 6 500 425. respectively. exponentially smooth the wine sales with a weight or smoothing constant of 0.2 for both level and trend will be used to smooth the wine sales. 57.2 for both level and trend will be used to smooth the wine sales. ANSWER: 356. ANSWER: 383. respectively. The smoothed values of the level and trend for 1998 are ______ and ______.2 for both level and trend will be used to smooth the wine sales. Referring to Table 16-6.8.952 TYPE: PR DIFFICULTY: Difficult KEYWORDS: exponential smoothing 77.400 3 398 341. Referring to Table 16-6.4. respectively. The smoothed values of the level and trend for 1992 are ______ and ______. Referring to Table 16-6.421 7 410 419.840 4 456 387. the Holt-Winters method for forecasting with a smoothing constant of 0.

3104 1995 358 388. forecasting 81. forecasting 82.2 for both level and trend will be used to forecast the wine sales. the Holt-Winters method for forecasting with a smoothing constant of 0.01 TYPE: FI DIFFICULTY: Moderate KEYWORDS: Holt-Winters method. Referring to Table 16-6.2 for both level and trend will be used to forecast the wine sales.4077 -44. Referring to Table 16-6.12 TYPE: FI DIFFICULTY: Moderate KEYWORDS: Holt-Winters method. ANSWER: 341.8 57.6827 55. the Holt-Winters method for forecasting with a smoothing constant of 0.7808 -17. The forecast for 1999 is _____. ANSWER: 213.238 Time-Series Forecasting and Index Numbers 80.22118 1997 410 432.7035 TYPE: PR DIFFICULTY: Difficult KEYWORDS: Holt-Winters method .9942 1996 500 468.2 for both level and trend. use the Holt-Winters method of fitting wine sales to compute the smoothed level and trend with a smoothing constant of 0.728 52. Referring to Table 16-6.6773 1998 376 383.84 1994 456 457.8207 -42. ANSWER: Year Series (Y) Level (E) Trend (T) 1991 270 1992 356 356 86 1993 398 406. The forecast for 2002 is _____.

Referring to Table 16-6. the Holt-Winters method for forecasting with a smoothing constant of 0. plot both the wine sales series and the series of Holt-Winters forecasts for 1999 to 2002 using a smoothing constant of 0. The smoothed values of the level and trend for 1993 are ______ and ______. scatter plot 84. The smoothed values of the level and trend for 1998 are ______ and ______. ANSWER: 356. ANSWER: 609. ANSWER: 600 500 400 300 200 100 0 1 2 3 4 5 6 7 8 9 10 11 12 Prediction Sales (Y) TYPE: PR DIFFICULTY: Difficult KEYWORDS: Holt-Winters method.Time-Series Forcasting and Index Numbers 239 83. respectively.11.46 TYPE: FI DIFFICULTY: Difficult KEYWORDS: Holt-Winters method .8 for both level and trend will be used to smooth the wine sales. 84. Referring to Table 16-6. the Holt-Winters method for forecasting with a smoothing constant of 0. 46.2 for both level and trend. Referring to Table 16-6.8 for both level and trend will be used to smooth the wine sales.2. the Holt-Winters method for forecasting with a smoothing constant of 0. respectively. The smoothed values of the level and trend for 1992 are ______ and ______. respectively. 86 TYPE: FI DIFFICULTY: Easy KEYWORDS: Holt-Winters method 85.24 TYPE: FI DIFFICULTY: Moderate KEYWORDS: Holt-Winters method 86. forecasting. Referring to Table 16-6.8 for both level and trend will be used to smooth the wine sales. ANSWER: 433.

240 Time-Series Forecasting and Index Numbers 87.11044 1998 376 609. use the Holt-Winters method of fitting wine sales to compute the smoothed level and trend with a smoothing constant of 0. ANSWER: 655.24 1994 456 505. The forecast for 1999 is _____.8 for both level and trend will be used to forecast the wine sales. The forecast for 2002 is _____.1475 72. ANSWER: 794.45507 TYPE: PR DIFFICULTY: Difficult KEYWORDS: Holt-Winters method .56 TYPE: FI DIFFICULTY: Moderate KEYWORDS: Holt-Winters method.62502 1996 500 591. Referring to Table 16-6. ANSWER: Year Series (Y) Level (E) Trend (T) 1991 270 1992 356 356 86 1993 398 433.93 TYPE: FI DIFFICULTY: Moderate KEYWORDS: Holt-Winters method. forecasting 88.1073 46. Referring to Table 16-6.7824 1995 358 541. the Holt-Winters method for forecasting with a smoothing constant of 0.8 for both level and trend.2 84.07412 1997 410 609. forecasting 89. Referring to Table 16-6.2737 58. the Holt-Winters method for forecasting with a smoothing constant of 0.018 68.8 for both level and trend will be used to forecast the wine sales.152 81.

the number of arrivals will be smoothed with a 3-term moving average. ANSWER: 900 800 700 600 500 400 300 200 100 0 1 2 3 4 5 6 7 8 9 10 11 12 Prediction Sales (Y) TYPE: PR DIFFICULTY: Difficult KEYWORDS: Holt-Winters method. 72.Time-Series Forcasting and Index Numbers 241 90. forecasting. properties 92. 84. plot both the wine sales series and the series of Holt-Winters forecasts for 1999 to 2002 using a smoothing constant of 0. 96. and 48. ANSWER: 4 TYPE: FI DIFFICULTY: Easy KEYWORDS: moving averages. scatter plot TABLE 16-7 The number of passengers arriving at San Francisco on the Amtrak cross country express on 6 successive Mondays were: 60. The first smoothed value will be __________. There will be a total of __________ smoothed values. Referring to Table 16-6. the number of arrivals will be smoothed with a 3-term moving average. 91.8 for both level and trend. Referring to Table 16-7. 36. Referring to Table 16-7. ANSWER: 76 TYPE: FI DIFFICULTY: Easy KEYWORDS: moving averages .

The first smoothed value will be __________. The smoothed value for the sixth Monday will be __________. ANSWER: 62. The last smoothed value will be __________. . Referring to Table 16-7. Referring to Table 16-7. the number of arrivals will be smoothed with a 5-term moving average. Referring to Table 11.7. exponentially smooth the number of arrivals using a smoothing constant of 0. Referring to Table 16-7. ANSWER: 56 TYPE: FI DIFFICULTY: Easy KEYWORDS: moving averages 94. Referring to Table 16-7. the number of arrivals will be exponentially smoothed with a smoothing constant of 0.1. ANSWER: 62. The smoothed value for the second Monday will be __________. the number of arrivals will be exponentially smoothed with a smoothing constant of 0.1. ANSWER: 61.6 TYPE: FI DIFFICULTY: Moderate KEYWORDS: moving averages 95. the number of arrivals will be smoothed with a 5-term moving average.1.2 TYPE: FI DIFFICULTY: Moderate KEYWORDS: exponential smoothing 97. The forecast for the seventh Monday will be __________. ANSWER: 67.1. the number of arrivals will be exponentially smoothed with a smoothing constant of 0.2 TYPE: FI DIFFICULTY: Moderate KEYWORDS: moving averages 96. the number of arrivals will be smoothed with a 3-term moving average.242 Time-Series Forecasting and Index Numbers 93. forecasting 99. The last smoothed value will be __________. Referring to Table 16-7. Referring to Table 16-7.0 TYPE: FI DIFFICULTY: Moderate KEYWORDS: exponential smoothing. ANSWER: 69.0 TYPE: FI DIFFICULTY: Moderate KEYWORDS: exponential smoothing 98.

ANSWER: 60.0000 2 72 61. ANSWER: 63. forecasting . The smoothed value for the second Monday will be __________.0 TYPE: FI DIFFICULTY: Moderate KEYWORDS: exponential smoothing 101. The smoothed value for the third Monday will be __________.6120 5 36 63.9957 TYPE: PR DIFFICULTY: Difficult KEYWORDS: exponential smoothing 100. Referring to Table 16-7. the number of arrivals will be exponentially smoothed with a smoothing constant of 0. ANSWER: 71. Referring to Table 16-7. Referring to Table 16-7. the number of arrivals will be exponentially smoothed with a smoothing constant of 0.Time-Series Forcasting and Index Numbers 243 ANSWER: Time Arrivals Smooth 1 60 60. the number of arrivals will be exponentially smoothed with a smoothing constant of 0.25.6 TYPE: FI DIFFICULTY: Moderate KEYWORDS: exponential smoothing. The forecast of the number of arrivals on the seventh Monday will be __________.25 TYPE: FI DIFFICULTY: Moderate KEYWORDS: exponential smoothing 102.25.2000 3 96 64.5508 6 48 61.6800 4 84 66.25.

Referring to Table 16-7. use the Holt-Winters method of fitting number of arrivals to compute the smoothed level and trend with a smoothing constant of 0. Referring to Table 16-7.3 for both level and trend will be used to forecast the number of arrivals. forecasting 107. the Holt-Winters method for forecasting with a smoothing constant of 0.43. forecasting 108. The forecast for the twelfth Monday is _____.3 for both level and trend will be used to smooth the number of arrivals. -15. 12 TYPE: FI DIFFICULTY: Easy KEYWORDS: Holt-Winters 105. ANSWER: 42.8281 6 48 60.6211 TYPE: PR DIFFICULTY: Difficult KEYWORDS: exponential smoothing 104.3 for both level and trend will be used to forecast the number of arrivals. the Holt-Winters method for forecasting with a smoothing constant of 0.3 for both level and trend.98 TYPE: FI DIFFICULTY: Moderate KEYWORDS: Holt-Winters. the Holt-Winters method for forecasting with a smoothing constant of 0.4375 5 36 64. respectively. ANSWER: -51.2500 4 84 74.74 TYPE: FI DIFFICULTY: Easy KEYWORDS: Holt-Winters 106. ANSWER: Time Arrivals Smooth 1 60 60. ANSWER: 72.0000 2 72 63.244 Time-Series Forecasting and Index Numbers 103. The smoothed values of the level and trend for the sixth Monday are ______ and ______. The smoothed values of the level and trend for the second Monday are ______ and ______. .25. exponentially smooth the number of arrivals using a smoothing constant of 0. the Holt-Winters method for forecasting with a smoothing constant of 0. Referring to Table 16-7. Referring to Table 16-7. Referring to Table 16-7. Referring to Table 16-7. The forecast for the seventh Monday is _____.0000 3 96 71. respectively.3 for both level and trend will be used to smooth the number of arrivals.70 TYPE: FI DIFFICULTY: Moderate KEYWORDS: Holt-Winters. ANSWER: 26.

88 4 84 91. respectively.9 for both level and trend will be used to smooth the number of arrivals.0028 5 36 54.884 5. Referring to Table 16-7. forecasting.Time-Series Forcasting and Index Numbers 245 ANSWER: Mondays Arrivals Level (E) Trend (T) 1 60 2 72 72 12 3 96 92. Referring to Table 16-7. 12 TYPE: FI DIFFICULTY: Easy KEYWORDS: Holt-Winters . The smoothed values of the level and trend for the second Monday are ______ and ______.26604 -24.7345 TYPE: PR DIFFICULTY: Difficult KEYWORDS: Holt-Winters 109. plot both the number of arrivals series and the series of HoltWinters forecasts for the seventh through twelfth Mondays using a smoothing constant of 0.4 17.3 for both level and trend. the Holt-Winters method for forecasting with a smoothing constant of 0. scatter plot 110.8317 6 48 42. ANSWER: 120 100 80 60 40 20 0 -20 -40 -60 1 2 3 4 5 6 7 8 9 10 11 12 Prediction Arrivals TYPE: PR DIFFICULTY: Difficult KEYWORDS: Holt-Winters.43029 -15. ANSWER: 72.

988 11.7773 11.27 TYPE: FI DIFFICULTY: Moderate KEYWORDS: Holt-Winters.26705 6 48 105. 10.62661 TYPE: PR DIFFICULTY: Difficult KEYWORDS: Holt-Winters . ANSWER: 105. Referring to Table 16-7.2 12. respectively. The forecast for the seventh Monday is _____. the Holt-Winters method for forecasting with a smoothing constant of 0.9 for both level and trend will be used to smooth the number of arrivals.9 for both level and trend will be used to forecast the number of arrivals. The smoothed values of the level and trend for the sixth Monday are ______ and ______.64.12 4 84 95. ANSWER: 169. forecasting 113.63 TYPE: FI DIFFICULTY: Easy KEYWORDS: Holt-Winters 112. Referring to Table 16-7.246 Time-Series Forecasting and Index Numbers 111.9 for both level and trend will be used to forecast the number of arrivals. use the Holt-Winters method of fitting the number of arrivals to compute the smoothed level and trend with a smoothing constant of 0. the Holt-Winters method for forecasting with a smoothing constant of 0. Referring to Table 16-7. The forecast for the twelfth Monday is _____.9868 5 36 100. forecasting 114.40 TYPE: FI DIFFICULTY: Moderate KEYWORDS: Holt-Winters. ANSWER: Mondays Arrivals Level (E) Trend (T) 1 60 2 72 72 12 3 96 85.6399 10.9 for both level and trend. the Holt-Winters method for forecasting with a smoothing constant of 0. ANSWER: 116. Referring to Table 16-7.

ANSWER: 180 160 140 120 100 80 60 40 20 0 1 2 3 4 5 6 7 8 9 10 11 12 Prediction Arrivals TYPE: PR DIFFICULTY: Difficult KEYWORDS: Holt-Winters.78 116.800 17 Coefficients 31. the fitted trend value for 1980 is __________. Referring to Table 16-8. She uses Microsoft Excel to obtain the partial output below.2 0. scatter plot TABLE 16-8 The president of a chain of department stores believes that her stores' total sales have been showing a linear trend since 1980. forecasting.604 0.9 for both level and trend. Referring to Table 16-7.2 TYPE: FI DIFFICULTY: Moderate KEYWORDS: least-squares trend fitting. SUMMARY OUTPUT Regression Statistics Multiple R R Square Adjusted R Square Standard Error Observations Intercept Coded Year 0.Time-Series Forcasting and Index Numbers 247 115. 1981 is coded as 1. ANSWER: 31. fitted value .365 0. plot both the number of arrivals series and the series of HoltWinters forecasts for the seventh through twelfth Mondays using a smoothing constant of 0. etc. where 1980 is coded as 0.316 4. while the independent variable is coded years. The dependent variable is sales (in millions of dollars).

the forecast for sales in 2005 is __________. forecasting . Referring to Table 16-8. Referring to Table 16-8. the forecast for sales in 2000 is __________. ANSWER: 35. interpretation 119. fitted value 118.7 TYPE: FI DIFFICULTY: Moderate KEYWORDS: least-squares trend fitting.248 Time-Series Forecasting and Index Numbers 117. ANSWER: 46. forecasting 120.8 TYPE: FI DIFFICULTY: Moderate KEYWORDS: least-squares trend fitting. Referring to Table 16-8. ANSWER: 0. ANSWER: 50.1 TYPE: FI DIFFICULTY: Moderate KEYWORDS: least-squares trend fitting. Referring to Table 16-8. slope. the fitted trend value for 1985 is __________. the estimate of the rate at which sales are increasing each year is __________.78 TYPE: FI DIFFICULTY: Moderate KEYWORDS: least-squares trend fitting.

Referring to Table 16-9.54(1. ANSWER: 27.02831 12 Intercept Coded Year Coefficients 1. Referring to Table 16-9. the fitted trend value for 1985 is __________.17)X TYPE: FI DIFFICULTY: Difficult KEYWORDS: least-squares trend fitting. SUMMARY OUTPUT Regression Statistics Multiple R R Square Adjusted R Square Standard Error Observations 0. fitted value 122. ANSWER: 60. fitted value 123. etc.992 0. the forecast for the demand in 1999 is __________.068 121. 1986 is coded as 1.44 0.Time-Series Forcasting and Index Numbers 249 TABLE 16-9 The executive vice-president of a drug manufacturing firm believes that the demand for the firm's most popular drug has been evidencing an exponential trend since 1985. the fitted exponential trend equation to predict Y is __________.991 0. Referring to Table 16-9.54 TYPE: FI DIFFICULTY: Moderate KEYWORDS: least-squares trend fitting. while the independent variable is years. forecasting . She uses Microsoft Excel to obtain the partial output below.996 0. fitted value 124.26 TYPE: FI DIFFICULTY: Moderate KEYWORDS: least-squares trend fitting. The dependent variable is the log base 10 of the demand for the drug.6 TYPE: FI DIFFICULTY: Moderate KEYWORDS: least-squares trend fitting. where 1985 is coded as 0. ANSWER: 246. ANSWER: 27. Referring to Table 16-9. the fitted trend value for 1990 is __________.

Referring to Table 16-10.250 Time-Series Forecasting and Index Numbers 125. He believes that these profits have been showing a quadratic trend since 1980. Referring to Table 16-9.5 0.996 17 Intercept Coded Year Year Squared Coefficients 35. Referring to Table 16-10. ANSWER: 35. the fitted value for 1980 is __________. SUMMARY OUTPUT Regression Statistics Multiple R R Square Adjusted R Square Standard Error Observations 0. forecasting TABLE 16-10 The manager of a marketing consulting firm has been examining his company's yearly profits. forecasting 129. He uses Microsoft Excel to obtain the partial output below. the fitted value for 1985 is __________. ANSWER: . Referring to Table 16-10. Referring to Table 16-10. the forecast for profits in 2000 is __________. ANSWER: 394. the forecast for profits in 2005 is __________.45 1. etc.996 4. The dependent variable is profit (in thousands of dollars).5 TYPE: FI DIFFICULTY: Moderate KEYWORDS: least-squares trend fitting. 1981 is coded as 1.996 0.46 TYPE: FI DIFFICULTY: Moderate KEYWORDS: least-squares trend fitting.75 TYPE: FI DIFFICULTY: Moderate KEYWORDS: least-squares trend fitting.5 TYPE: FI DIFFICULTY: Moderate KEYWORDS: least-squares trend fitting.00 126.998 0. fitted value 128. fitted value 127. where 1980 is coded as 0. ANSWER: 62. ANSWER: 444. while the independent variables are coded years and squares of coded years. the forecast for the demand in 2002 is __________.

3X. forecasting 133. forecasting . The data she used were from 1993 through 1998. ANSWER: 6. Microsoft Excel was used to obtain the following quadratic trend equation: Sales = 100 – 10X + 15X2.000 TYPE: FI DIFFICULTY: Moderate KEYWORDS: autoregressive model.309. The forecast for 1999 is __________.4.2(Sales)i-1. The manager of a company believed that her company's profits were following an exponential trend. A second-order autoregressive model for average mortgage rate is: Ratei = – 2.5 (Rate)i-2. The data used was from 1989 through 1998.Time-Series Forcasting and Index Numbers 251 671. forecasting 131. forecasting 130. ANSWER: 1. The forecast for 1999 profits is __________. If sales in 1998 are 6000. the forecast for 1999 is __________.75 TYPE: FI DIFFICULTY: Moderate KEYWORDS: least-squares trend fitting. coded 0 to 5. A first-order autoregressive model for stock sales is: Salesi = 800 + 1. ANSWER: 7. She used Microsoft Excel to obtain a prediction equation for the logarithm (base 10) of profits: log10(Profits) = 2 + 0. forecasting 132.500 TYPE: FI DIFFICULTY: Moderate KEYWORDS: least-squares trend fitting.57 TYPE: FI DIFFICULTY: Moderate KEYWORDS: least-squares trend fitting.4 TYPE: FI DIFFICULTY: Moderate KEYWORDS: autoregressive model. coded 0 to 9.8(Rate)i-1 – 0. the forecast of sales for 1999 is __________. If the average mortgage rate in 1998 was 7. and in 1997 was 6.0 + 1. ANSWER: 8.0.

forecasting TABLE 16-11 Business closures in Laramie.5 (Rate)i-2.33. A second-order autoregressive model for average mortgage rate is: Ratei = – 2. 26. ANSWER: 11.0.77 0.8(Rate)i-1 – 0.80 1.59 135.05. ANSWER: 7. the forecast for 2000 is __________. the fitted values for the first-order autoregressive model are ________. Wyoming from 1989 to 1994 were: 1993 10 1994 11 1995 13 1996 19 1997 24 1998 35 Microsoft Excel was used to fit both first-order and second-order autoregressive models. resulting in the following partial outputs: SUMMARY OUTPUT – 2nd Order Model Intercept X Variable 1 X Variable 2 Coefficients -5. ________. 16. 13.4. If the average mortgage rate in 1998 was 7.51.00 TYPE: FI DIFFICULTY: Moderate KEYWORDS: autoregressive model. ________. and ________.14 SUMMARY OUTPUT – 1st Order Model Intercept X Variable 1 Coefficients -4.74. Referring to Table 16-11.252 Time-Series Forecasting and Index Numbers 134. ________. 34.16 1.0 + 1. fitted value .82 TYPE: FI DIFFICULTY: Difficult KEYWORDS: autoregressive model. and in 1997 was 6.

________. Referring to Table 16-11.05. 1. fitted value 139.90 TYPE: FI DIFFICULTY: Moderate KEYWORDS: autoregressive model. 17.Time-Series Forcasting and Index Numbers 253 136. the value of the MAD for the first-order autoregressive model is ________. residual 137. the values of the MAD for the two models indicate that the first-order model should be used for forecasting. ________. and ________. model selection 138. ANSWER: 14. ________. ANSWER: False TYPE: TF DIFFICULTY: Moderate KEYWORDS: autoregressive model. the fitted values for the second-order autoregressive model are ________.43. ANSWER: -. the residuals for the second-order autoregressive model are ________. ________. Referring to Table 16-11. the value of the MAD for the second-order autoregressive model is ________. ANSWER: 1. True or False: Referring to Table 16-11. Referring to Table 16-11. ANSWER: – 1. ________. residual 140. the residuals for the first-order autoregressive model are ________.09 TYPE: FI DIFFICULTY: Moderate KEYWORDS: autoregressive model.83. Referring to Table 16-11. – 0. ANSWER: 0. 35.74. – 0. ________.00 TYPE: FI DIFFICULTY: Moderate KEYWORDS: autoregressive model. model selection .17.49.322 TYPE: FI DIFFICULTY: Moderate KEYWORDS: autoregressive model.25. 24.43. and ________.09 TYPE: FI DIFFICULTY: Moderate KEYWORDS: autoregressive model. -.25.33. 2. 1. and ________. Referring to Table 16-11. ________. model selection 141. -2.

985 9. 163.150 15 Intercept X Variable 1 Coefficients 5.1.987 0.85 SUMMARY OUTPUT – 1st Order Model Regression Statistics Multiple R R Square Adjusted R Square Standard Error Observations 0.254 Time-Series Forecasting and Index Numbers TABLE 16-12 The manager of a health club has recorded average attendance in the club’s newly introduced step classes over the last 15 months: 32. 205.993 0. She then used Microsoft Excel to obtain the following partial output for both a first. 39. 118.0.987 0.8. 133.5. 46.10 142. 106. 73.985 9. the forecast of average attendance for month 16 is __________.6. forecasting . 40.and second-order autoregressive model.276 15 Intercept X Variable 1 X Variable 2 Coefficients 5.1.2.0. using the first-order model.3.37 0.3.66 1.1.1. 182. ANSWER: 295.7.86 0.51 TYPE: FI DIFFICULTY: Moderate KEYWORDS: autoregressive model.8. SUMMARY OUTPUT – 2nd Order Model Regression Statistics Multiple R R Square Adjusted R Square Standard Error Observations 0.5. 65. and 263. Referring to Table 16-12. 83. 249.993 0.

ANSWER: 315. the secondorder model is the better model for making forecasts. ANSWER: 346. the forecast of average attendance for month 17 is __________. Referring to Table 16-12. forecasting 144. based on the parsimony principle. the forecast of average attendance for month 17 is __________.09 TYPE: FI DIFFICULTY: Moderate KEYWORDS: autoregressive model.Time-Series Forcasting and Index Numbers 255 143. using the first-order model. ANSWER: False TYPE: TF DIFFICULTY: Easy KEYWORDS: autoregressive model.72 TYPE: FI DIFFICULTY: Moderate KEYWORDS: autoregressive model. forecasting 146. Referring to Table 16-12. the forecast of average attendance for month 16 is __________. ANSWER: 330. model selection . forecasting 145. using the second-order model. Referring to Table 16-12. using the second-order model. True or False: Referring to Table 16-12.42 TYPE: FI DIFFICULTY: Moderate KEYWORDS: autoregressive model.

Q2 is a dummy variable equal to 1 in the second quarter of a year and 0 otherwise. interpretation 149. is log10(6. slope.012 X – 0. prior to seasonal adjustment. slope.098 Q3 ˆ where Y is the estimated number of contracts in a quarter X is the coded quarterly value with X = 0 in the first quarter of 1998. the best interpretation of the coefficient of Q2 (–0. is log10(6.102).8%. b) the annual growth rate in revenues is around 1. using quarterly data on its revenues during the 4-year period from 1998 to 2002.102. The following is the resulting regression equation: ˆ log10 Y = 6. c) the quarterly growth rate in revenues is around 12%. ANSWER: c TYPE: MC DIFFICULTY: Moderate KEYWORDS: exponential model.054 Q2 + 0. the best interpretation of the constant 6.102 + 0. after seasonal adjustment. Q3 is a dummy variable equal to 1 in the third quarter of a year and 0 otherwise. Referring to Table 16-13. d) the annual growth rate in revenues is around 28%.012) in the regression equation is: a) the quarterly growth rate in revenues is around 1.054) in the regression equation is: .2%.102. 147. c) the quarterly growth rate in revenues is around 12%. Q1 is a dummy variable equal to 1 in the first quarter of a year and 0 otherwise.102 in the regression equation is: a) the fitted value for the first quarter of 1998. is 106. interpretation 150. is 106. d) the annual growth rate in revenues is around 12%.129 Q1 – 0. intercept.2%. Referring to Table 16-13. prior to seasonal adjustment. c) the fitted value for the first quarter of 1998.102). Referring to Table 16-13. ANSWER: b TYPE: MC DIFFICULTY: Moderate KEYWORDS: exponential model.256 Time-Series Forecasting and Index Numbers TABLE 16-13 A local store developed a multiplicative time-series model to forecast its revenues in future quarters. b) the annual growth rate in revenues is around 2. Referring to Table 16-13. the estimated quarterly compound growth rate in revenues is: a) the quarterly growth rate in revenues is around 1.2%. after seasonal adjustment. b) the fitted value for the first quarter of 1998. interpretation 148. d) the fitted value for the first quarter of 1998. the best interpretation of the coefficient of X (0. ANSWER: a TYPE: MC DIFFICULTY: Moderate KEYWORDS: exponential model.

Time-Series Forcasting and Index Numbers 257 a) the revenues in the second quarter of a year are approximately 5. d) the revenues in the third quarter of a year are approximately 25. to obtain a forecast for the first quarter of 2002 using the model. b) the revenues in the second quarter of a year are approximately 5. interpretation 152. Q1 = 0. which of the following sets of values should be used in the regression equation? a) X = 16. Q3 = 0 c) X = 17.31% higher than the average over all 4 quarters.098) in the regression equation is: a) the revenues in the third quarter of a year are approximately 9. Q3 = 0 d) X = 17. slope. Q2 = 1. c) the revenues in the third quarter of a year are approximately 25. ANSWER: d TYPE: MC DIFFICULTY: Moderate KEYWORDS: exponential model.4% lower than the average over all 4 quarters. ANSWER: d TYPE: MC DIFFICULTY: Moderate KEYWORDS: exponential model. c) the revenues in the second quarter of a year are approximately 11.8% higher than they would be during the fourth quarter. Q3 = 0 b) X = 16. Q2 = 0. Referring to Table 16-13. Q2 = 0. Q3 = 0 ANSWER: a TYPE: MC DIFFICULTY: Moderate KEYWORDS: exponential model. d) the revenues in the second quarter of a year are approximately 11.31% higher than they would be during the fourth quarter. the best interpretation of the coefficient of Q3 (0. interpretation 151. Q2 = 1.4% lower than they would be during the fourth quarter. b) the revenues in the third quarter of a year are approximately 9.69% lower than the average over all 4 quarters. Q1 = 1. Referring to Table 16-13. Q1 = 0.8% higher than the average over all 4 quarters. slope. forecasting . Q1 = 1.69% lower than they would be during the fourth quarter.

12 TYPE: PR DIFFICULTY: Moderate KEYWORDS: exponential model. Q2 = 0. forecasting 156. Q3 = 0 ANSWER: a TYPE: MC DIFFICULTY: Moderate KEYWORDS: exponential model. Q1 = 0. what is the forecast for revenues in the fourth quarter of 2004? ANSWER: 2666858. what is the forecast for revenues in the first quarter of 2005? ANSWER: 2037042. Q1 = 0. Q2 = 0. using the regression equation. Q3 = 1 c) X = 23. forecasting 155.258 Time-Series Forecasting and Index Numbers 153.67 TYPE: PR DIFFICULTY: Moderate KEYWORDS: exponential model. to obtain a forecast for the third quarter of 2003 using the model. Referring to Table 16-13. Q2 = 0. Q2 = 0. Referring to Table 16-13. Q1 = 0. forecasting . Q2 = 0. Q3 = 0 c) X = 8. what is the forecast for revenues in the third quarter of 2003? ANSWER: 2910717. Q3 = 1 ANSWER: b TYPE: MC DIFFICULTY: Moderate KEYWORDS: exponential model. which of the following sets of values should be used in the regression equation? a) X = 7. Q1 = 1. to obtain a forecast for the fourth quarter of 1999 using the model. Q2 = 0. Referring to Table 16-13. Q1 = 1. forecasting 157. Q1 = 0. Q3 = 0 b) X = 22. using the regression equation. which of the following sets of values should be used in the regression equation? a) X = 22. Q2 = 0. Q3 = 0 d) X = 8. Referring to Table 16-13.08 TYPE: PR DIFFICULTY: Moderate KEYWORDS: exponential model. Q3 = 0 b) X = 7. using the regression equation. forecasting 154. Q1 = 0. Q2 = 0. Referring to Table 16-13. Q1 = 0. Q3 = 0 d) X = 23.

decision. conclusion.05).0000. t test on slope. which of the following is the best interpretation of this result? a) The revenues in the first quarter of the year are significantly different than the revenues in an average quarter ( = 0.05). Referring to Table 16-13. c) The revenues in the first quarter of the year are significantly different than the revenues in the fourth quarter ( = 0. c) The quarterly growth rate in revenues is significantly different than 1.Time-Series Forcasting and Index Numbers 259 158.05). α α α α ANSWER: a TYPE: MC DIFFICULTY: Moderate KEYWORDS: exponential model. decision. t test on slope.2% ( = 0.05).05). Referring to Table 16-13. α α α α ANSWER: d TYPE: MC DIFFICULTY: Moderate KEYWORDS: exponential model. interpretation 159. d) The quarterly growth rate in revenues is not significantly different than 1.492. in testing the significance of the coefficient of X in the regression equation (0. d) The revenues in the first quarter of the year are not significantly different than the revenues in the fourth quarter ( = 0.2% ( = 0.129). which has a p-value of 0.05). which has a p-value of 0. b) The revenues in the first quarter of the year are not significantly different than the revenues in an average quarter ( = 0.05). b) The quarterly growth rate in revenues is not significantly different than 0% ( = 0. conclusion. which of the following is the best interpretation of this result? a) The quarterly growth rate in revenues is significantly different than 0% ( = 0.05). interpretation .012). in testing the significance of the coefficient for Q1 in the regression equation (– 0.

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