SCENARIO 16-9
Given below are EXCEL outputs for various estimated autoregressive models for a company's real operating revenues (in billions of dollars)from 1989 to 2012.From the data,you also know that the real operating revenues for 2010,2011,and 2012 are 11.7909,11.7757 and 11.5537,respectively.
First-Order Autoregressive Model:
Second-Order Autoregressive Model:

-Referring to Scenario 16-9 and using a 5% level of significance,what is the appropriate autoregressive model for the company's real operating revenue?
A)First-Order Autoregressive Model
B)Second-Order Autoregressive
C)Third-Order Autoregressive
D)Any of the above

Question

SCENARIO 16-9
Given below are EXCEL outputs for various estimated autoregressive models for a company's real operating revenues (in billions of dollars)from 1989 to 2012.From the data,you also know that the real operating revenues for 2010,2011,and 2012 are 11.7909,11.7757 and 11.5537,respectively.
First-Order Autoregressive Model:
  Second-Order Autoregressive Model:
  
-Referring to Scenario 16-9 and using a 5% level of significance,what is the appropriate autoregressive model for the company's real operating revenue?
A)First-Order Autoregressive Model 
B)Second-Order Autoregressive 
C)Third-Order Autoregressive 
D)Any of the above

Quizplus · Accepted Answer

A first-order autoregressive model is appropriate when the current value of a series is best predicted by its immediately preceding value, and this is often determined through statistical tests like the Durbin-Watson test for autocorrelation at a specific level of significance. Without specific details from Scenario 16-9, the general principle is that the simplest model that adequately fits the data should be chosen, hence a first-order autoregressive model is often preferred if it fits the data well.

SCENARIO 16-9 Given Below Are EXCEL Outputs for Various Estimated Autoregressive Models