Question 1

The following linear trend equation was developed for annual sales from 1995 to 2001 with 1995 the
Base or zero year. ŷ = 500 + 60t ($000). What are the estimated sales for 2005 ($000)?
A) $500
B) $560
C) $600
D) $1,040
E) $1,100

Accepted Answer

$1,100

Question 2

The following linear trend equation was developed for the annual sales of the Jordan Manufacturing
Company. ŷ = 500 + 60t ($000). How much are sales increasing?
A) $60,000 per year
B) $6,000 per month
C) $500,000 per year
D) $6,000 per year
E) $500 per month

Accepted Answer

$60,000 per year

Question 3

Given a linear time series trend,  = - 5.2 + 3.1t, what is the forecast for 2015 if the t = 0 in 2007?
A) 22.7
B) 33.1
C) 30.0
D) 21.7
E) 19.6

Accepted Answer

19.6

Question 4

i. In the linear trend equation, the letter "b" is the average change in t for each change of one unit
(either increase or decrease) in y.
ii. The least squares method of computing the equation for a straight line going through the data of
Interest gives the "best ﬁtting" line.
iii. A straight-line trend equation is used to represent the time series when it is believed that the
Data is increasing (or decreasing) by equal amounts, on the average, from one period to another.
A) (i), (ii), and (iii) are all correct statements.
B) (i) and (ii) are correct statements but not (iii).
C) (i) and (iii) are correct statements but not (ii).
D) (ii) and (iii) are correct statements but not (i).
E) (i), (ii), and (iii) are all false statements.

Accepted Answer

(ii) and (iii) are correct statements but (i).

Question 5

If the least squares equation for sales data is ŷ = 10 + 1.3t ($ millions), with t = 0 in 1995, what is the
Value of t and the forecast for 2002?
A) t = 6, y = 17.8
B) t = 0, y = 10.0
C) t = 7, y = 19.1
D) t = 10, y = 0.0
E) t = 7, y = 9.1

Accepted Answer

t = 7, y = 19.1

Question 6

i. If the sales, production or other data over a period of time tend to approximate a straight-line
Trend, the equation developed by the least squares method cannot be used to forecast sales for a
Future period.
ii. A straight-line trend equation is used to represent the time series when it is believed that the data
Is increasing (or decreasing) by equal amounts, on the average, from one period to another.
iii. If the past data approximates a straight line, the equation used is 
= a + bt, where a is the y-
Intercept and b is the slope of the line.
A) (i), (ii), and (iii) are all correct statements.
B) (i) and (ii) are correct statements but not (iii).
C) (i) and (iii) are correct statements but not (ii).
D) (ii) and (iii) are correct statements but not (i).
E) (i), (ii), and (iii) are all false statements.

Accepted Answer

(ii) and (iii) are correct statements but (i).

Question 7

i. The moving average method merely smooths out the ﬂuctuations in the data.
ii. The moving average method averages out cyclical (C) and irregular (I) components.
iii. Sales, production and other economic and business series usually have periods of oscillation that
Are of equal length or identical amplitudes.
A) (i), (ii), and (iii) are all correct statements.
B) (i) and (ii) are correct statements but not (iii).
C) (i) and (iii) are correct statements but not (ii).
D) (ii) and (iii) are correct statements but not (i).
E) (i), (ii), and (iii) are all false statements.

Accepted Answer

(i) and (ii) are correct statements but (iii).

Question 8

What is the forecast for year 9?

A) 17.100
B) 28.122
C) 19.325

Accepted Answer

19.325

Question 9

i. In a time series analysis, the letter "a" in the linear trend equation, is the value of  when t = 0.
ii. In the linear trend equation, the letter "b" is the average change in t for each change of one unit
(either increase or decrease) in y.
iii. In the linear trend equation, t is any value that corresponds with a time period, (i.e. month or
Quarter.
A) (i), (ii), and (iii) are all correct statements.
B) (i) and (ii) are correct statements but not (iii).
C) (i) and (iii) are correct statements but not (ii).
D) (ii) and (iii) are correct statements but not (i).
E) (i), (ii), and (iii) are all false statements.

Accepted Answer

(i) and (iii) are correct statements but (ii).

Question 10

For a time series beginning with 1988 and extending up to 2001, which year would be coded with a
One when using the coded method?
A) 1986
B) 1988
C) 1989
D) 1998
E) 1996

Accepted Answer

1988

Question 11

i. In the linear trend equation, t is any value that corresponds with a time period, i.e., month or
Quarter.
ii. The least squares method of computing the equation for a straight line going through the data of
Interest gives the "best ﬁtting" line.
iii. If the sales, production or other data over a period of time tend to approximate a straight-line
Trend, the equation developed by the least squares method cannot be used to forecast sales for a
Future period.
A) (i), (ii), and (iii) are all correct statements.
B) (i) and (ii) are correct statements but not (iii).
C) (i) and (iii) are correct statements but not (ii).
D) (ii) and (iii) are correct statements but not (i).
E) (i), (ii), and (iii) are all false statements.

Accepted Answer

(i) and (ii) are correct statements but (iii).

Question 12

i. In the linear trend equation, the letter "b" is the average change in t for each change of one unit
(either increase or decrease) in y.
ii. In the linear trend equation, t is any value that corresponds with a time period, i.e., month or
Quarter.
iii. The least squares method of computing the equation for a straight line going through the data of
Interest gives the "best ﬁtting" line.
A) (i), (ii), and (iii) are all correct statements.
B) (i) and (ii) are correct statements but not (iii).
C) (i) and (iii) are correct statements but not (ii).
D) (ii) and (iii) are correct statements but not (i).
E) (i), (ii), and (iii) are all false statements.

Accepted Answer

(ii) and (iii) are correct statements but (i).

Question 13

i. In the linear trend equation, t is any value that corresponds with a time period, i.e., month or
Quarter.
ii. A straight-line trend equation is used to represent the time series when it is believed that the data
Is increasing (or decreasing) by equal amounts, on the average, from one period to another.
iii. If the past data approximates a straight line, the equation used is 
= a + bt, where a is the y-
Intercept and b is the slope of the line.
A) (i), (ii), and (iii) are all correct statements.
B) (i) and (ii) are correct statements but not (iii).
C) (i) and (iii) are correct statements but not (ii).
D) (ii) and (iii) are correct statements but not (i).
E) (i), (ii), and (iii) are all false statements.

Accepted Answer

(i), (ii), and (iii) are all correct statements.

Question 14

Listed below is the net sales in $ million for Home Depot Inc., and its subsidiaries from 1994 to
2003. 
Using the printout below, what are the estimated sales for 2004? 
A) $90,618.6 Million
B) $77,690.9 Million
C) $84,154.7 Million
D) $103,546.4 Million
E) $71,227.0 Million

Accepted Answer

$71,227.0 Million

Question 15

If you have annual data for 1991 to 2002 and want to code the years for the calculation of the trend,
What should you code the year 1991?
A) 0
B) 1
C) 91
D) -6
E) -13

Accepted Answer

1

Question 16

Given the trend equation ŷ = 25 + 0.6t (t = 0 in 2010), what would be the forecast value for 2014?
A) 2.4
B) 28.0
C) 3.0
D) 32.0
E) 27.4

Accepted Answer

27.4

Question 17

A linear trend equation is used to represent time series values when the dependent data are
Changing by equal?
A) Percents
B) Proportions
C) Amounts
D) Rights
E) Exponents

Accepted Answer

Amounts

Question 18

i. In a time series analysis, the letter "a" in the linear trend equation, is the value of  when t = 0.
ii. In the linear trend equation, t is any value that corresponds with a time period, i.e., month or
Quarter.
iii. If the sales, production or other data over a period of time tend to approximate a straight-line
Trend, the equation developed by the least squares method cannot be used to forecast sales for a
Future period.
A) (i), (ii), and (iii) are all correct statements.
B) (i) and (ii) are correct statements but not (iii).
C) (i) and (iii) are correct statements but not (ii).
D) (ii) and (iii) are correct statements but not (i).
E) (i), (ii), and (iii) are all false statements.

Accepted Answer

(i) and (ii) are correct statements but (iii).

Question 19

In the linear trend equation, how is the average change in the dependent variable represented for
Every unit change in time?
A) a
B) b
C) t
D) ŷ
E) r

Accepted Answer

b

Question 20

What is a disadvantage of estimating a trend line equation by "eye-balling" the best ﬁtting line to a
Scatter diagram?
A) Provides quick approximations
B) Is subject to human error
C) Provides accurate forecasts
D) Is too diﬃcult to calculate
E) Requires graph paper

Accepted Answer

Is subject to human error

Quiz 16: Decision Making and Payoff Tables in Investment Scenarios

The following linear trend equation was developed for annual sales from 1995 to 2001 with 1995 the Base or zero year. ŷ = 500 + 60t ($000) . What are the estimated sales for 2005 ($000) ?

The following linear trend equation was developed for the annual sales of the Jordan Manufacturing Company. ŷ = 500 + 60t ($000) . How much are sales increasing?

Given a linear time series trend, = - 5.2 + 3.1t, what is the forecast for 2015 if the t = 0 in 2007?

If the least squares equation for sales data is ŷ = 10 + 1.3t ($ millions) , with t = 0 in 1995, what is the Value of t and the forecast for 2002?

What is the forecast for year 9?

For a time series beginning with 1988 and extending up to 2001, which year would be coded with a One when using the coded method?

Listed below is the net sales in $ million for Home Depot Inc., and its subsidiaries from 1994 to 2003. Using the printout below, what are the estimated sales for 2004?

If you have annual data for 1991 to 2002 and want to code the years for the calculation of the trend, What should you code the year 1991?

Given the trend equation ŷ = 25 + 0.6t (t = 0 in 2010) , what would be the forecast value for 2014?

A linear trend equation is used to represent time series values when the dependent data are Changing by equal?

In the linear trend equation, how is the average change in the dependent variable represented for Every unit change in time?

What is a disadvantage of estimating a trend line equation by "eye-balling" the best ﬁtting line to a Scatter diagram?