Exam

Name___________________________________

TRUE/FALSE. Write 'T' if the statement is true and 'F' if the statement is false.

1) The multiple coefficient of determination measures the percentage of variation in the dependent 1)
variable that is explained by the independent variables in the model.

2) In a single exponential smoothing model, finding the forecast value for each period requires having 2)
the actual and forecasted values from the proceeding period. The first period should use an
estimated average value based on previous estimates

3) In a multiple regression model, each regression slope coefficient measures the average change in 3)
the dependent variable for a one-unit change in the independent variable, all other variables held
constant.

4) In the model diagnosis step in regression modeling, we are interested in whether the overall 4)
regression model and individual variables are significant in addition to satisfying regression
analysis assumptions.

5) On a survey there is a question that asks whether someone lives in a house, apartment, or 5)
condominium. These three responses could be coded in a dummy variable using value 0, 1, and 2.

6) If a stepwise regression approach is used to enter, one at a time, four variables into a regression 6)
model, the resulting regression equation may differ from the regression equation that occurs when
all four of the variables are entered at one step.

7) When we say that we wish to determine the aptness of a regression model, we are actually saying 7)
that we wish to check to see whether the resulting model meets the basic assumptions of regression
analysis.

8) A stockbroker at a large brokerage firm recently analyzed the combined annual profits for all firms 8)
in the airline industry. One time-series component that may have been present in these annual data
was a seasonal component.

9) The reason for using split samples in developing a forecasting model is to eliminate the potential 9)
for bias in the resulting model.

10) Recently, a manager for a major retailer computed the following seasonal indexes: 10)

Fall Qtr Winter Qtr Spring Qtr Summer Qtr

1.61 0.75 0.91 0.73

The manager then developed the following least squares trend model based on the past five years
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of quarterly data: y = 200 + 11.5t. Based on this, the seasonally adjusted forecast for quarter 25,
which is the winter quarter, is 489.11

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 11) Herb Criner, an analyst for the Folgerty Company, recently gave a report in which he stated that 11)
the annual sales forecast based on 20 years of annual sales data was done using a seasonally
adjusted, trend-based forecasting technique. Given the information presented here, this statement
has the potential to be credible.

12) If a time-series plot indicates that the data do not appear to exhibit a trend, then a double 12)
exponential smoothing model would likely be the most appropriate to use rather than simple
exponential smoothing model.

13) The t-test is not appropriate for ordinal data or if the populations examined are not believed to be 13)
approximately normally distributed and other methods such as the Wilcoxon test can be used.

14) The Mann-Whitney U test can be used to test whether two independent populations have the same 14)
median so long as the data are measured on at least an ordinal scale.

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15) In regression model: y = 0 + 1 x 1 + 2 x 1 + , if 2 < 0, then the value of y is expected to increase 15)

with x until x reaches a certain point after which the value of y is expected to decrease.

16) The Baker's Candy Company has been in business for three years. The quarterly sales data for the 16)
company are shown as follows:

Quarter Sales
1 3000
2 3500
3 4000
4 2900
5 3100
6 3400
7 4100
8 2800
9 3000
10 3600
11 4000
12 2800

Based on these data, the seasonal index for quarters 3, 7, and 11 is approximately 1.61

MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question.

17) Nonparametric statistical tests are used when: 17)

A) the standard normal distribution cannot be computed.
B) the sample sizes are small.
C) the population parameters are unknown.
D) we are unwilling to make the assumptions of parametric tests.

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18) Which of the following is not an indication of potential multicollinearity problems? 18)
A) The sign on the standard error of the estimate is positive.
B) The standard error of the estimate increases when a variable enters the model in the presence
of other independent variables.
C) An independent variable goes from being statistically significant to being insignificant when
a new variable is added to the model.
D) A sign on a regression slope coefficient is negative when the sign on the correlation coefficient
was positive.

19) A multiple regression is shown for a data set of yachts where the dependent variable is the price in 19)
thousands of dollars.

Given this information, what is the null hypothesis for testing the overall model?
A) H0 : 1 = 2 = 3 = 4 = 0 B) H0 : 0 = 0
C) H0 : 1 = 0 D) H0 : 0 = 1 = 2 = 3 = 4 = 0

20) A decision maker is considering including two additional variables into a regression model that has 20)
as the dependent variable, Total Sales. The first additional variable is the region of the country
(North, South, East, or West) in which the company is located. The second variable is the type of
business (Manufacturing, Financial, Information Services, or Other). Given this, how many
additional variables will be incorporated into the model?
A) 2 B) 9 C) 8 D) 6

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21) Assume that a time-series plot takes the form of that shown in the following graph: 21)

Given this plot, which of the following models would likely give the best fit?
^ ^
A) y = b0 + b1 t + b1 t2 + b3 t3 + b4 t4 B) y = b0 b1 + b1 t
^ ^
C) y = b0 + b1 t + b1 t2 D) y = b0 + b1 t + b1 t2 + b1 t3

22) Interaction exists in a multiple regression model when: 22)

A) a polynomial model used.
B) the regression model is overall insignificant.
C) multicollinearity is present in a regression model.
D) one independent variable affects the relationship between another independent variable and
the dependent variable.

23) The following model: 23)

y = 0 + 1 x1 + 2 x 2 + 3 x1 x 2 +
A) is a composite model. B) is a convex model.
C) is a linear model with interaction. D) is a second order polynomial model.

24) A decision maker has five potential independent variables with which to build a regression model 24)
to explain the variation in the dependent variable. At step 1, variable x3 enters the regression
model. Which of the following indicates which of the four remaining independent variables will be
next to enter the model?
A) The variable with the highest coefficient of partial determination
B) The variable that will provide the next largest value for the slope coefficient
C) The variable that has the next highest correlation with the dependent variable
D) Can't be determined without seeing the correlation matrix.

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25) The editors of a national automotive magazine recently studied 30 different automobiles sold in the 25)
United States with the intent of seeing whether they could develop a multiple regression model to
explain the variation in highway miles per gallon. A number of different independent variables
were collected. The following regression output (with some values missing) was recently presented
to the editors by the magazine's analysts:

Based on this output and your understanding of multiple regression analysis, what is the adjusted
R-square value for this model?
A) Approximately 0.90 B) Just under 0.48
C) About 0.82 D) None of the above

26) Which of the following time-series components can be identified when a company has 12 weeks of 26)
data beginning January and extending through March?
A) Seasonal component B) Random component
C) Trend component D) Both B and C

27) Suppose an economist has developed a model for forecasting annual consumption, y t, as function 27)
of total labor income, x 1t, and total property income, x 2t based on 20 years on annual data. The
following regression model has been developed:
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y t= 7.81 + 0.91x 1t + 0.57x 2t with the standard error = 1.29 and the Durbin-Watson d statistic = 2.09.
Using an alpha = .05, which of the following is the correct critical value for testing whether the
residuals are autocorrelated?
A) 1.08 and 1.53
B) 1.20 and 1.41
C) 1.10 and 1.54
D) Can't be determined without seeing the residuals.

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28) The General Electric service department believes that the median time for a service call should be 28)
30 or fewer minutes. To test this, the following random sample of service times was collected:

Time
33
27
40
34
22
19
40
73
26

Given that the managers do not wish to make the assumption that the population is normally
distributed, the critical value for the test about median service times, using a .05 level of
significance, is:
A) 8 B) 37 C) 40 D) 5

29) If a two-tailed Wilcoxon Matched-Pairs Signed Rank test is conducted for a sample of n = 8 and an 29)
alpha level equal to .05, the critical value is:
A) 1.96 B) 4 C) 30 D) 2

30) When employing a small sample Mann-Whitney U test for a two-tailed test, which of the 30)
following is true?
A) Select either of the U values to be the test statistic.
B) The alpha level should be doubled.
C) The sample sizes need to be equal.
D) Select as the test statistic the smaller of the two U values.

31) Which of the following is not an assumption of the Kruskal-Wallis one-way analysis of variance? 31)
A) Population distributions are identical except for possible differences in center.
B) Sample sizes are equal for all populations.
C) Variables have a continuous distribution.
D) Samples are independent.

32) In a multiple regression, the dependent variable is house value (in '000$) and one of the 32)
independent variables is a dummy variable, which is defined as 1 if a house has a garage and 0 if
not. The coefficient of the dummy variable is found to be 5.4 but the t-test reveals that it is not
significant at the 0.05 level. Which of the following is true?
A) We need to include other dummy variables.
B) A garage increases the house value by $5,400, holding all other independent variables
constant.
C) The house value remains the same with or without a garage.
D) A garage increases the house value by $5,400.

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33) The editors of a national automotive magazine recently studied 30 different automobiles sold in the 33)
United States with the intent of seeing whether they could develop a multiple regression model to
explain the variation in highway miles per gallon. A number of different independent variables
were collected. The following regression output (with some values missing) was recently presented
to the editors by the magazine's analysts:

Based on this output and your understanding of multiple regression analysis, what is the value of
the standard error of the estimate for this model?
A) About 5.97 B) Approximately 2.02
C) Nearly 8.0 D) Approximately 14.05

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34) Consider the situation in which a human resources manager wishes to determine whether the 34)
median number of days of sick leave per year is greater for female employees than for male
employees. The following data represent random samples of males and females:

Males Females
5 14
10 5
0 13
9 7
2 8
7 0
5 7
10 10
3 6
1 5

If the manager is unwilling to assume that the populations are normally distributed, which of the
following is the correct conclusion to reach if the test is conducted using a .05 level of significance?
A) Do not reject the null hypothesis
B) Conclude that males have a higher median than females
C) Conclude that females do have a higher median than males
D) Reject the null hypothesis

35) A survey was recently conducted in which random samples of car owners of Chrysler, GM, and 35)
Ford cars were surveyed to determine their satisfaction. Each owner was asked to rate overall
satisfaction on a scale of 1 (poor) to 1000 (excellent). The following data were recorded:

Chrysler GM Ford
650 400 700
700 800 750
500 500 650
800 400 800
900 600 900
750 900 700

If the analysts are not willing to assume that the population ratings are normally distributed and
will use the Kruskal-Wallis test to determine if the three companies have different median ratings,
what is the correct conclusion if the test is to be conducted using an alpha = .05 level?
A) H0 should not be rejected and we conclude that there is no significant difference between the
3 companies.
B) H0 should be rejected and we conclude that there is no significant difference between the 3
companies.
C) H0 should be rejected and we conclude that there is a significant difference between the 3
companies.
D) H0 should not be rejected and we conclude that there is a significant difference between the 3
companies.

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Wilcoxon Signed-Ranks Table

The following table provides the critical values for two-tailed tests

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