Test Bank for Business Forecasting, 6th Edition: Wilson

Test Bank for Business Forecasting, 6th Edition:

Wilson

To download the complete and accurate content document, go to:

https://testbankbell.com/download/test-bank-for-business-forecasting-6th-edition-wils
on/

Visit TestBankBell.com to get complete for all chapters

Chapter 5

Multiple Choice
Identify the choice that best completes the statement or answers the question.

____ 1. If the linear assumption in regression is violated?

a. No particular problem results.
b. Predictions of Y can still be made, but the coefficient of determination is invalid.
c. The formulas in regression analysis do not apply.
d. The slope of the sample line must be adjusted upward before it can be used.
e. None of the above.
____ 2. Which of the following is not an assumption of multiple regression models?
a. The Y values are normally distributed about the multiple regression hyper-plane.
b. All X values are measured on a continuous scale.
c. A linear relationship exists between each X variable and Y.
d. The Y values are independent of each other.
e. Dispersion of points around the regression hyper-plane is constant everywhere on
the plane.
____ 3. A regression of retail sales on disposable income and two interest rates, the prime rate and the short-
term savings rate, is likely to have the problem of
a. seasonality.
b. heteroscedasticity.
c. multicollinearity.
d. serial correlation.
e. None of the above.
____ 4. Perfect multicollinearity is the
a. presence of a perfect linear association among independent variables in the sample.
b. presence of zero linear association among independent variables in the sample.
c. presence of significant covariation between adjacent residuals.
d. absence of significant covariation between adjacent residuals.
e. None of the above.
____ 5. Dummy variables
a. are used to measure the presence or absence of a certain attribute.
b. can be used to model the effects of seasonality in the data.
c. take on the value of either zero or one.
d. are indicator random variables.
e. All of the above.

Personnel Test

Note: The next few questions utilize the following information:

The personnel department of a large manufacturing firm selected a random sample of 23 workers.
The workers were interviewed and given several tests. On the basis of the test results, the following
variables were investigated: X2 = manual dexterity score, X3 = mental aptitude score, and X4 =
personnel assessment score.
 Subsequently, the workers were observed in order to determine the average number of units of work
completed (Y) in a given time period for each worker. Regression analysis yielded these results:
Y = -212 + 1.90X2 + 2.00X3 + 0.25X4, R2 = .75.
(.050) (.060) (.20)

____ 6.
The quantities in parentheses are the standard errors of the regression coefficients. The standard
error of the regression is 25, and the standard deviation of the dependent variable is 50.

Which variables are making a significant contribution to the prediction of units of work completed at
the .01 significance level (two tailed)?
a. All three variables.
b. Manual dexterity and personnel assessment.
c. Manual dexterity and mental aptitude.
d. Personnel assessment.
e. None of the variables are statistically significant.
____ 7. Which of the following statements is the correct interpretation of the mental aptitude regression
coefficient?
a. If we increase mental aptitude by one unit, holding the predictor variables
constant, units of work completed will increase by an average of 2.0.
b. If we increase units of work completed by one unit, holding the other predictor
variables constant, the mental aptitude score will increase by an average of 2.0.
c. If we increase mental aptitude by one unit, holding the other predictor variables
constant, units of work completed will increase by an average of .6.
d. If we increase mental aptitude by one unit, holding the other predictor variables
constant, units of work completed will decrease by an average of .6.
e. If we increase mental aptitude by one unit, units of work completed will increase
by an average of 2.0.
____ 8. What percent of the variation of units of work completed can be explained by this model?
a. 50
b. 25
c. 90
d. 60
e. 75
____ 9. What is the correct estimate for the number of units of work completed by a worker with a manual
dexterity score of 100, a mental aptitude score of 80 and a personnel assessment score of 10?
a. 140.5
b. 154.3
c. 105.5
d. 138.0
e. 150.0
____ 10. What is the table t value to test whether a regression coefficient is statistically significant at the .05
level (one tailed) for this problem?
a. 1.729
b. 2.093
 c. 1.725
d. 2.086
e. 1.328
____ 11. Graphically, a multiple regression model with two independent variables looks like a
a. line.
b. plane.
c. hyperplane.
d. rectangle.
e. quadrilateral.
____ 12. A multiple regression model using 200 data points (with three independent variables) has how many
degrees of freedom for testing the statistical significance of individual slope coefficients?
a. 199.
b. 198.
c. 197.
d. 196.
____ 13. Using the significance levels reported by ForecastXTM, at what level can we reject a one-sided null
relating to a slope coefficient's statistical significance such that we are 95% confident?
a. .12.
b. .11.
c. .1.
d. .09.
e. None of the above.
____ 14. What action may reduce multicollinearity when two independent variables have a common trend?
a. Squaring one of the variables.
b. Subtracting one from the other.
c. First-differencing the data.
d. Dividing one by the other.
e. All of the above.
____ 15. Which of the following is not recommended in selecting the correct set of independent variables for
multiple regression?
a. R-squared.
b. Adjusted R-squared.
c. Akaike Information Criterion.
d. Bayesian Information Criterion.
e. None of the above.
____ 16. How are the AIC and BIC model selection criteria used in the model selection process for multiple
regression?
a. AIC is minimized whereas BIC is maximized.
b. AIC is maximized whereas BIC is minimized.
c. Both AIC and BIC are maximized.
d. Both AIC and BIC are minimized.
e. None of the above.
____ 17. Which of the following is not correct about near multicollinearity?

a. It arises when we have two or more independent variables which essentially

 measure the same effect on the dependent variable.
b. It arises when we have two or more independent variables, which are highly
correlated.
c. It is often indicated by a large value of the calculated F statistic for the multiple
regression model accompanied by relatively small values of the calculated t-
statistics for individual parameters.
d. It is often indicated by a small value of the calculated F statistic for the multiple
regression model accompanied by relatively large values of the calculated t-
statistics for individual parameters.
e. a. and b. are correct.

Estimated Demand Function

The following is an estimated demand function:

Q = 875 + 6 XA + 15 Y - 5 P
(125) (2) (4) (-1.2)

Where Q is quantity sold, XA is advertising expenditure (in thousands of dollars), Y is income (in
thousands of dollars), and P is the good’s price. The standard errors for each estimate are in
parentheses. The equation has been estimated from 10 years of quarterly data. The R2 was .92; the
F-statistic was 57; the Standard Error of the Estimate (SEE) is 25.

____ 18.

According to the common 95 percent level of significance (estimated) for the regression above,

a.
all variables are probably significant.
b.
only price is significant.
c.
no variable is significant.
d.
unable to determine from information given.
____ 19. Suppose the values of the explanatory variables next period are: Advertising = $100,000; Income =
$10,000; and Price = $100. Using the above fitted regression, what is the predicted value of sales?
a. 2125
b. 1625
c. 1125
d. 1870
e. unable to determine from the information given.
____ 20. For the above regression, an estimated 95 percent confidence interval around the sales prediction
would be
a. 1125 to 1225
b. 1025 to 1125
c. 1425 to 1850
d. 1760 to 1920
e. 1075 to 1175
____ 21. When autocorrelation is present, which of the following is not a problem?
a. Estimated coefficients may be unreliable.
b. The t and F statistics are no longer applicable.
c. The R-squared tends to be too small.
d. The adjusted R-squared tends to be too large.
e. All of the above.
____ 22. Which of the following "goodness-of-fit" measures should not be used in the context of multiple
regression?
a. The F statistic.
b. The Durbin-Watson statistic.
c. The Coefficient of Determination.
d. The AIC and BIC criteria.
e. None of the above.
____ 23. The F-statistic in the multiple regression model
a. is used to test for the presence of serial correlation.
b. tests for the presence of first-order autocorrelation.
c. tests for the significance of the R-squared statistic.
d. is used to test for data non-linearity.
e. All of the above.
____ 24. A potential diagnosis and/or cure for the multicollinearity problem does not include
a. dropping all but one of the highly correlated independent variables from the model.
b. valuing variables in nominal, not real, terms.
c. testing for a high degree of correlation among the independent variables.
d. comparing signs and sizes of estimated coefficients with what is expected on the
basis of economic theory.
e. All of the above.
____ 25. Forecasters who base model selection criteria on the maximization of R2 should
a. be wary that extremely high values of R2 may indicate a definitional relationship
rather than causal as required by the multiple regression models.
b. be aware that the simple R-squared measure is suspect when autocorrelation is
present.
c. be aware that R-squared can be made arbitrarily large by adding additional
explanatory variables to the model.
d. instead use the adjusted R-squared measure.
e. All of the above.
____ 26. Multicollinearity in a regression model occurs when
a. the Durbin-Watson statistic and the R-squared are correlated.
b. there is some correlation among the residuals and the values of the explanatory
variables.
c. there is no correlation between the forecast error in one period and the error in the
next period.
d. a nonlinear specification is used.
e. None of the above.
____ 27. Which statement is not correct?
a. R-squared is a measure of the degree of variability in the dependent variable about
 its sample mean explained by the regression line.
b. The adjusted R-squared measure should be used in the case of more than one
independent variable.
c. The null hypothesis that R2 = 0 can be tested using the F-statistic.
d. Forecasters should select independent variables on the basis of R2.
e. All the above.
____ 28. When autocorrelation is present, which of the following is a problem?
a. Regression coefficient estimates are biased.
b. The t and F distributions are no longer applicable.
c. The D-W statistic is close to minus one.
d. Spurious regression.
e. None of the above.
____ 29. The F-test in multiple regression
a. is used to test for the presence of autocorrelation.
b. tests for the presence of first-order autocorrelation.
c. tests the significance of the Durbin-Watson statistic.
d. tests a null involving all regression slope coefficients simultaneously.
e. is used to test the significance of individual coefficients.
____ 30. The F-statistic reported in standard multiple regression computer packages tests which hypothesis?
a. H0: 1  2  3  ..  K  0.
b. H0: 1 + 2 + 3 + .. + K = 0.
c. H0: 1 = 2 = 3 = .. = K = 0.
d. H0: The set of independent variables has a significant linear influence on the
dependent variable.
____ 31. The Durbin-Watson statistic
a. is used to test the null hypothesis of first-order autocorrelation.
b. has a t distribution with N - (K+1) degrees of freedom.
c. is the squared value of the F-statistic.
d. is used to test the null of no multicollinearity.
e. None of the above.
____ 32. Which of the following statements are true?
a. Autocorrelation arises when there is a perfect linear association between the
dependent and independent variables.
b. Autocorrelation implies the error terms have differing variances.
c. Autocorrelation causes the estimated regression standard error to be biased.
d. Autocorrelation can be tested using the F-statistic.
____ 33. The inclusion of seasonal dummy variables to a multiple regression model may help eliminate
a. autocorrelation if the data are characterized by seasonal fluctuations.
b. perfect multicollinearity.
c. near multicollinearity.
d. bias in OLS slope estimates caused by autocorrelation.
e. All of the above.
____ 34. Consider the following group: R-squared, Adjusted R-squared, Akaike Information Criterion (AIC),
Bayesian Information Criterion (BIC). Which one doesn't belong with the rest of the others?
a. R-squared.
 b. Adjusted R-squared.
c. Akaike Information Criterion (AIC.)
d. Bayesian Information Criterion (BIC.)
____ 35. Model A has an AIC number of 300 whereas model B has an AIC number of 400 (both models have
the same dependent variable). This suggests that which model is more correctly specified?
a. Model A.
b. Model B.
c. Can't tell without knowing sample size.
d. Not enough information is provided.
____ 36. Which of the following is not correct? Seasonality in a time series data set containing quarterly
observations can be handled by
a. using four dummy variables, one for each season.
b. using three dummy variables to represent any three of the quarters.
c. using Winter's smoothing.
d. deseasonalizing the data and then applying nonseasonal methods.
____ 37. A company has computed a seasonal index for its quarterly sales. Which of the following statements
about the index is not correct?
a. The sum of the four quarterly index numbers should be 4.
b. An index of .75 for the first quarter indicates that sales were 25 percent lower than
the average quarterly sales.
c. In index of 1.1 for the second quarter indicates that sales were 10 percent above
the average quarterly sales.
d. The index for any quarter must be between zero and 2.
e. The average index for each of the four quarters should be 1.
____ 38. How would you model the effect of rain on attendance to a soccer game?
a. Create a dummy variable to represent rain and a second dummy variable to
represent no rain.
b. Introduce a variable measuring the inches of rain for a given day.
c. Create a single rain dummy variable.
d. Omit rain days from the data set.
e. All of the above.
____ 39. Which of the following is probably not a potential cause of data seasonality?
a. Weather.
b. Cultural Traditions.
c. Religious Traditions.
d. Government Behavior.
e. Income.
____ 40. Quarterly seasonal dummy variables take on values
a. 1 to 4.
b. 1 to 3.
c. 0 to 3.
d. 0 to 4.
e. None of the above.
____ 41. Including male and female dummy variables in the same regression to represent sex will likely result
in
 a. near multicollinearity.
b. perfect multicollinearity.
c. serial correlation.
d. heteroscedasticity.
e. All of the above.
____ 42. In using quarterly time series data, which quarter can serve as the base period for interpretation of
dummy variables?
a. Quarter one.
b. Quarter two.
c. Quarter three.
d. Quarter four.
e. Any of the above.
____ 43. In a regression of sales on income and seasonal dummy variables for a quarterly time series, a
negative sign of the quarter 3 dummy variable means
a. sales for quarter three are negative.
b. sales for quarter three are below average.
c. sales for quarter three are below that of the base quarter.
d. sales for quarter three are above average.
e. None of the above.
____ 44. Which of the following types of models cannot be satisfactorily estimated using ordinary least
squares regression (with or without data transformations)?
a. Y =  + 1(X) + 2(X2).
b. Y =  + 1(X) + 2(X3).
c. Y = (XY).
d. Y = B0X.
e. All of the above types can be estimated using OLS.
____ 45. Which of the following statements is not true?
a. Data nonlinearity can be modeled by adding the square of an independent variable
to the regression equation.
b. Many economic relationships are nonlinear due to the concept of diminishing
marginal returns.
c. A logarithmic transformation is used to estimate exponential relationships among
variables.
d. Cubic polynomials cannot be estimated using any form of multiple regression.
e. All of the above.
____ 46. Which of the following is not useful advice in using multiple regression to generate forecasts?
a. One should always prefer quantitative models to subjective expertise.
b. Keep the model simple.
c. Use the AIC and BIC measures to help in selecting the appropriate set of
independent variables.
d. Focus on model accuracy rather than model fit.
e. All of the above.
____ 47. Large and complicated forecasting models
a. are expensive to maintain.
b. are hard to explain to upper-level management.
 c. tend to be distrusted by management.
d. tend to put too much emphasis on quantitative aspects of forecasting.
e. All of the above.

Domestic Car Sales

Consider the following multiple regression model of domestic car sales (DCS) where:

DCS = domestic car sales

DCSP= domestic car sales price (in dollars)
PR= prime rate as a percent (i.e., 10% would be entered as 10)
Q2= quarter 2 dummy variable
Q3= quarter 3 dummy variable
Q4= quarter 4 dummy variable

____ 48.
Does the regression pass the "first quick check (i.e., economic realism)?"

a. No, because the sign of one of the regression coefficients is incorrect.

b. Yes, because the signs of all the regression coefficients are correct.
 c. No, because the price variable does not make economic sense to include in the regression.
d. Yes, because the SEE passes its statistical test.
____ 49. For the domestic car sales regression, which variable coefficients pass the "second quick check (i.e., statistical
significance)?"
a. All of the coefficients pass.
b. None of the coefficients pass.
c. Those that pass are DCSP, Q2, and Q3.
d. Those that pass are DCSP, PR, and Q4.
e. Those that pass are Q2, Q3, and Q4.
____ 50. For the domestic car sales regression above, the "third quick check" shows what (i.e., accuracy)?
a. It shows that more than three-quarters of the variation in DCS is explained.
b. It shows that almost no serial correlation exists.
c. It shows that a great deal of seasonality exists in the data.
d. It shows that a small trend exists in the data.
____ 51. In the domestic car sales regression above, what evidence do you have of any pattern in the error terms?
a. The SEE indicates a high probability of a pattern in the error terms.
b. The AIC and BIC both indicate a pattern in the error terms.
c. There are no error terms in this regression and so there can be no pattern.
d. The Durbin Watson statistic indicates little pattern in the error terms.
____ 52. For the domestic car sales regression above, assume that:

DCSP = $10,000
PR= 10 percent
and that it is the first quarter of the year.

What will DCS be predicted to be by the regression model?

a. 6,545.45
b. 1,858.62
c. 3,466.16
d. 2,071.99
____ 53. For the domestic car sales regression above, assume that:

DCSP = $10,000
PR= 10 percent
and that it is the first quarter of the year.

What will be the approximate 95% confidence interval for the DCS prediction?
a. 2313 to 1831
b. 1649 to 2039
c. 2964 to 4126
d. 4620 to 7156
____ 54. In the domestic car sales function there is evidence of seasonality. How does the regression model show this
evidence?
a. With the Durbin Watson statistic.
b. With the t-statistics on the dummy variables.
c. With the SEE.
d. With the F-statistic.
e. With the R-Square.
____ 55. For the domestic car sales regression the coefficient of determination shows that
 a. 120.60 is the error associated with the independent variable.
b. 288.10 will be the error associated with DCS.
c. 3,266.66 will be the most likely value of DCS.
d. 75.64% of the variation in DCS is explained by variation in the independent variables.
____ 56. The domestic car sales model
a. could be used to forecast DCS at some future date.
b. was estimated using a least squares model.
c. is a linear model.
d. All of the above are true.
e. None of the above are true.
____ 57. The AIC can be of help in model selection when choosing among
a. coefficients in a multiple regression.
b. appropriate lag structures.
c. different orders of a polynomial regression.
d. all of the above are correct.
____ 58. The Principle of Parsimony is given in the following statement:
a. overfitting a model is always preferable to underfitting a model.
b. the more independent variables used, the higher the R2.
c. use the BIC as an aid in selecting the appropriate number of observations to use.
d. use the smallest number of parameters necessary to represent the data adequately.
____ 59. The Akaike rule of thumb is
a. if the AIC is between 0 to 2 from the "best" model, there is substantial support for both
models.
b. if the AIC is between 4 and 7 from the "best" model there is substantial support for both
models.
c. if the AIC is negative neither model can be optimal.
d. if the AIC is less than 10 there is substantial support for neither model.
____ 60. Use the Akaike criterion
a. in observational studies when there are large numbers of variables.
b. in exploratory studies when you have no a priori hypotheses.
c. in experimental studies when you are testing few effects.
d. to select the correct degrees of freedom to use in evaluating summary statistics.

ForecastX Regressions

Exhibit #1
 Exhibit #2

Consider the two regressions presented above in answering the following questions.

____ 61.
In the simple regression above

a. the first quick check fails.

b. the second quick check fails.
c. there does not appear to be first order serial correlation.
d. the independent variable is Sales.
____ 62. Consider the two regressions shown above.
a. The simple regression is probably overfit.
b. The simple regression is probably underfit.
c. The multiple regression has only one significant independent variable.
d. The multiple regression probably suffers from rampant multicollinearity.
____ 63. Consider the two regressions shown above. For the multiple regression above the Akaike Information
Criterion indicates
 a.
that the multiple regression is less optimal than the simple regression.
b.
that approximately 86% of the variation in sales is explained.
c.
that the addition of an income variable resulted in a more optimal model.
d.
that the researcher should give substantial consideration to both the simple and multiple
regression.
____ 64. Consider the two regressions shown above.
a. The simple regression probably suffers from specification error.
b. The multiple regression probably suffers from specification error.
c. The simple regression probably suffers from multicollinearity.
d. The multiple regression probably suffers from autocorrelation.

Bottled Water

Shown above is the demand for bottled water in thousands of Gallons for 110 consecutive weeks. From weeks
75 through 84 there was a severe flood in the area. Shown below are two regression results using this data.

Regression #1
 Regression #2

____ 65. Consider the two regressions shown above. Which of the following statements is true?
 a. All independent variables are significant at the 99% level in both regressions.
b. The coefficient on the "Week" index has an incorrect sign in both regressions.
c. Neither regression seems to suffer from serial correlation.
d. Both regressions explain more than 90% of the variation in "Demand."
e. None of the above statements are true.
____ 66. Examine the Akaike Information Criterion for both Regression #1 and Regression #2 above.
a. Both AIC measures are statistically significant at the 95% level
b. Neither AIC measure is significant at the 95% level.
c. Only the Regression #2 AIC is significant at the 95% level
d. Both AIC measures are significant at the 99% level.
e. None of the above statements are true.
____ 67. Consider the two regressions immediately above. The "Intervention" variable in Regression #2 represents the
flood period by taking on a value of "1" when there is a flood during that week and a value of zero otherwise.
How would you interpret the coefficient of the "Intervention" variable in Regression #2?
a. For each week in which flood occurred 24.70 more bottled water is demanded than in the
first week in the time series.
b. For each week in which flood occurred 24.70 more bottled water is demanded than in the
week immediately preceding the beginning of the flood.
c. For each week in which flood occurred 24.70 more bottled water is demanded than in the
average week in the time series.
d. For each week in which flood occurred 24.70 more bottled water is demanded than in the
average nonflood week in the time series.
____ 68. Consider Regression #2 immediately above. You should use the rule of thumb taught in class to answer this
question. In order to create the approximate 95% confidence interval for an estimate of demand
a. 19.27 must be added to and subtracted from the point estimate.
b. two times 19.27 must be added to and subtracted from the point estimate.
c. 3.70 must be added to and subtracted from the point estimate.
d. two times 3.70 must be added to and subtracted from the point estimate.
e. None of the above are correct statements of how to construct the approximate 95%
confidence interval.
____ 69. Consider the two regression models immediately above. When comparing these two regressions with respect
to accuracy
a. it is correct to choose the model that minimizes RMSE but maximizes MAPE.
b. it is incorrect to use either RMSE or MAPE; only MAPE can be used across different
regression models.
c. it is correct to choose the model that minimizes both RMSE and MAPE.
d. only the F Statistic should be compared across two different regressions.
e. None of the above statements concerning accuracy are correct.
____ 70. Consider the two regressions immediately above. In using the Akaike Information Criterion and the Bayesian
Information Criterion "closeness" counts (as in the game of horseshoes). Using the rule of thumb we learned
in class regarding the interpretation of the information criteria we could correctly say
a. both models have "substantial support" because the AIC and BIC are so close in value to
one another.
b. only Regression #1 has "substantial support" because of the differences in the values of
the AIC and BIC.
c. only Regression #2 has "substantial support" because of the differences in the values of
the AIC and BIC.
d. neither regression has "substantial support" since both regressions have AIC and BIC
values substantially above 100.
____ 71. The Akaike Information Criterion (AIC) may be used
a. to determine the correct set of independent variables in a regression.
b. to determine the correct “form” of a regression.
c. to determine the best lag structure in a regression.
d. All of the above are correct.
e. None of the above are correct.

Television Add Yields

Television add yields are sometimes measured in millions of retained impressions. The following two
regressions model the effectiveness of adds for 21 consumer products. The data is from The Wall Street
Journal, March 1, 1984.

The variables collected for each of the 21 products are:

SPENDING: TV advertising budget, ($ millions) MILIMP: Millions of retained impressions,
MILIMP Sqrd: Millions of retained impressions squared.

A scatterplot of the data used appears below:

Regression #1
 Regression #2

____ 72. Regression #1 above

a. has a better Akaike score than Regression #2.

b. has a better Coefficient of Variation score than Regression #2.
c. suffers from a serious multicollinearity problem.
 d. suffers from a serious autocorrelation problem.
e. None of the above are true.
____ 73. Regression #2 above for TV Add Yields

a. may suffer from autocorrelation.

b. is superior to Regression #1 in terms of Akaike score.
c. is inferior to Regression #1 in terms of the Adjusted Coefficient of Determination score.
d. has P-values that are lower than acceptable.
e. None of the above are true.
____ 74. For the TV Add Yield regressions above

a. the standard error of the estimate is better for Regression #1.

b. the standard error of the estimate is better for Regression #2.
c. a forecast confidence interval will be wider for Regression #2.
d. only Regression #1 has acceptable t-statistics.
e. None of the above are true.

Education

A question of interest to many educators and college admissions officers is whether and to what
extent high school students' performance on standardized tests can forecast their performance in
college. That is, does how well a student do on a test before entering college bear any relationship to
his/her performance in college.
Jeffrey Wooldridge used data collected by Christopher Lemmon at Michigan State University to
examine this question. The data contain information about students' final GPA for all years of
college, their performance on the ACT (a standardized test commonly used for college admissions),
and their high school GPA (labeled hsGPA below). They estimated models to examine the links
between GPA in college and these two separate pre-college measures.
Estimating their regression equation in a statistical software package yielded the following results:

Note: “_cons” is the constant term in the regression.

The dependent variable is “college GPA” shown as colGPA above.
____ 75. According to this regression, the most predictive variable for forecasting college GPA was
a. high school GPA.
b. the ACT score
c. Neither variable was predictive.
d. Both variables were equally predictive.
e. None of the above are correct.
____ 76. In the Education regression ACT is best described as a(n)
a. independent variable.
b. dependent variable.
c. constant coefficient.
d. variable coefficient.
____ 77. In the Education regression college GPA is best described as a(n)
a. independent variable.
b. dependent variable.
c. constant coefficient.
d. variable coefficient.
____ 78. The internal auditor of a bank has developed a multiple regression model which has been used for a number
of years to forecast the amount of interest income from commercial loans. During the current year, the auditor
applies the model and discovers that the adjusted R2 value has decreased dramatically, but otherwise the
model seems to be working okay. Which of the following conclusions are justified by the change?
a. Changing to a cross-sectional regression analysis should cause the adjusted R2 to increase.
b. Regression analysis is no longer an appropriate technique to estimate interest income.
c. Some new factors, not included in the model, are causing interest income to change.
d. A linear regression analysis would increase the model’s reliability.

Lackland

Lackland Ski Resort uses multiple regression to forecast ski lift revenues for the next week based on the
forecasted number of days with temperatures above 10 degrees and predicted number of inches of snow. The
following function has been developed:

Sales = 10,902 + 255 (number days predicted above 10 degrees) +

300 (number of inches of snow predicted)

Other information generated from the analysis include

Adjusted R2 = .6789
Standard Error of the Estimate (SEE) = 1,879
F-statistic = 6.279 with a significance of .049

____ 79.
Which variable(s) in this function is (are) the dependent variable(s)?
a. Predicted number of days above 10 degrees.
b. Predicted number of inches of snow.
c. Revenue.
d. Predicted number of days above 10 degrees and predicted number of inches of snow.
____ 80. Assume that the management predicts the number of days above 10 degrees for the next week to be 6 and the
number of inches of snow to be 12. Calculate the predicted amount of revenue for the next week.
 a. $10,902
b. $11,362
c. $16,032
d. $20,547
____ 81. Which of the following represents an accurate interpretation of the results of Lackland’s regression analysis?
a. 6.729% of the variation in revenue is explained by the predicted number of days above 10
degrees and the number of inches of snow.
b. The relationships are not significant.
c. The predicted number of days above 10 degrees is a more significant variable than the
number of inches of snow.
d. 67.89% of the variation in revenue is explained by the predicted number of days above 10
degrees and the number of inches of snow.
____ 82. Assume that Lackland’s model predicts revenue for a week to be $13,400. Calculate the 95% confidence
interval for the amount of revenue for the week. (The 95% confidence interval corresponds to the area
representing 2.3436 deviations from the mean.)
a. $13,400 ± 6,279
b. $13,400 ± 4,404
c. $13,400 ± 6,786
d. $13,400 ± 8,564
Chapter 5
Answer Section

MULTIPLE CHOICE

1. ANS: C PTS: 1
2. ANS: B PTS: 1
3. ANS: C PTS: 1
4. ANS: A PTS: 1
5. ANS: E PTS: 1
6. ANS: C PTS: 1
7. ANS: A PTS: 1
8. ANS: E PTS: 1
9. ANS: A PTS: 1
10. ANS: A PTS: 1
11. ANS: B PTS: 1
12. ANS: D PTS: 1
13. ANS: D PTS: 1
14. ANS: C PTS: 1
15. ANS: A PTS: 1
16. ANS: D PTS: 1
17. ANS: D PTS: 1
18. ANS: A PTS: 1
19. ANS: C PTS: 1
20. ANS: E PTS: 1
21. ANS: C PTS: 1
22. ANS: C PTS: 1
23. ANS: C PTS: 1
24. ANS: B PTS: 1
25. ANS: E PTS: 1
26. ANS: E PTS: 1
27. ANS: D PTS: 1
28. ANS: D PTS: 1
29. ANS: D PTS: 1
30. ANS: C PTS: 1
31. ANS: E PTS: 1
32. ANS: C PTS: 1
33. ANS: A PTS: 1
34. ANS: A PTS: 1
35. ANS: A PTS: 1
36. ANS: A PTS: 1
37. ANS: D PTS: 1
38. ANS: C PTS: 1
39. ANS: E PTS: 1
40. ANS: E PTS: 1
41. ANS: B PTS: 1
42. ANS: E PTS: 1
43. ANS: C PTS: 1
44. ANS: E PTS: 1
45. ANS: D PTS: 1
46. ANS: A PTS: 1
47. ANS: E PTS: 1
48. ANS: B PTS: 1
49. ANS: C PTS: 1
50. ANS: A PTS: 1
51. ANS: D PTS: 1
52. ANS: D PTS: 1
53. ANS: A PTS: 1
54. ANS: B PTS: 1
55. ANS: D PTS: 1
56. ANS: D PTS: 1
57. ANS: D PTS: 1
58. ANS: D PTS: 1
59. ANS: A PTS: 1
60. ANS: A PTS: 1
61. ANS: A PTS: 1
62. ANS: B PTS: 1
63. ANS: C PTS: 1
64. ANS: A PTS: 1
65. ANS: A PTS: 1
66. ANS: E PTS: 1
67. ANS: D PTS: 1
68. ANS: D PTS: 1
69. ANS: C PTS: 1
70. ANS: C PTS: 1
71. ANS: D PTS: 1
72. ANS: E PTS: 1
73. ANS: B PTS: 1
74. ANS: B PTS: 1
75. ANS: A PTS: 1
76. ANS: A
from CPA exam

PTS: 1
77. ANS: B
from CPA exam

PTS: 1
78. ANS: C
from CPA exam

PTS: 1
79. ANS: C
Test Bank for Business Forecasting, 6th Edition: Wilson

from CPA exam

PTS: 1
80. ANS: C
from CPA exam

PTS: 1
81. ANS: D
from CPA exam

PTS: 1
82. ANS: B
from CPA exam

PTS: 1

Visit TestBankBell.com to get complete for all chapters