Question 1

In a recent meeting,a manager indicated that sales tend to be higher during October,November,and December and lower in the spring.In making this statement,she is indicating that sales for the company are cyclical.

Accepted Answer

False

Question 2

Model specification is the process of determining how well a forecasting model fits the past data.

Accepted Answer

Model specification involves selecting the appropriate form of the model to represent the relationship between variables, not determining the fit of the model to past data.

Question 3

To compare one value measured at one point in time with other values measured at different points in time,index numbers must be used.

Accepted Answer

Since the values have been measured at different points in time, they cannot be directly compared. Index numbers can help to standardize the values so that they can be compared over time.

Question 4

The time-series component that implies a long-term upward or downward pattern is called the trend component.

Accepted Answer

The trend component represents the underlying long-term upward or downward pattern of a time series.

Question 5

Stock analysts have recently stated in a meeting on Wall Street that over the past 50 years there have been periods of high market prices followed by periods of lower prices but over time prices have moved upwards.Given their statement,stock prices most likely exhibit only trend and cyclical components.

Accepted Answer

The statement implies that stock prices exhibit not only trend (long-term direction) and cyclical components (fluctuations due to economic cycles) but also potentially other components such as seasonal (regular fluctuations within a year) and irregular (unpredictable, random fluctuations) components, as the overall movement is not solely upward and involves fluctuations.

Question 6

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

Accepted Answer

Seasonal components are patterns that repeat over a specific period, such as quarters or months, within a year. The combined annual profits for all firms in the airline industry would not exhibit a seasonal component because seasonal variations are observed within a year, not from year to year.

Question 7

Two common unweighted indexes are the Paasche Index and the Laspeyres Index.

Accepted Answer

The Paasche Index and the Laspeyres Index are both weighted indexes, not unweighted. They use different weighting schemes to measure the changes in the price level of a basket of goods and services over time.

Question 8

Some stocks are referred to as cyclical stock because they tend to be in favor for several years and then out of favor for several years.This is a correct use of the term cyclical.

Accepted Answer

Cyclical stocks are characterized by their sensitivity to the economic cycle, meaning that they tend to perform well during periods of economic growth and decline during periods of recession or economic slowdown. This cyclical nature can lead to periods of popularity followed by periods of unpopularity as economic conditions shift. Therefore, the statement that some stocks are referred to as cyclical because they tend to be in favor for several years and then out of favor for several years is a correct use of the term cyclical.

Question 9

In order for a time series to exhibit a seasonal component,the data must be measured in periods as short or shorter than quarterly.

Accepted Answer

The answer of In order for a time series to...

Question 10

In order to identify a cyclical component in time-series data,one year of weekly data should be sufficient.

Accepted Answer

A cyclical component in time-series data typically spans multiple years or even decades, and requires data covering multiple cycles for accurate identification. One year of weekly data may provide some initial insights, but it is unlikely to be sufficient for a thorough analysis of cyclical patterns.

Question 11

Harrison Hollow,an upscale eatery in Atlanta,tracks its sales on a daily basis.Recently,the manager stated that sales over the past three weeks have been very cyclical.Given the data she has,this statement is not a reasonable one to make.

Accepted Answer

The answer of Harrison Hollow,an upscale eatery in Atlanta,tracks its...

Question 12

One of the basic tools for creating a trend-based forecasting model is regression analysis.

Accepted Answer

Regression analysis is a basic tool for creating a trend-based forecasting model. It enables us to find the relationship between two variables and make predictions based on the data.

Question 13

The forecasting interval is the unit of time for which forecasts are made.

Accepted Answer

The forecasting interval refers to the range within which future values are expected to fall, with a certain probability, rather than the unit of time for which forecasts are made.

Question 14

You are given the following linear trend model: F_t = 345.60 - 200.5(t).The forecast for period 15 is approximately -2,662.

Accepted Answer

To find the forecast for period 15, we substitute t=15 into the given linear trend model: F_t = 345.60 - 200.5(t) F₍₁₅₎ = 345.60 - 200.5(15) F₍₁₅₎ = 345.60 - 3007.5 F₍₁₅₎ = -2661.9 Therefore, the forecast for period 15 is approximately -2,662. This means the statement is true and the answer is A.

Question 15

While virtually all time series exhibit a random component,not all time series exhibit other components.

Accepted Answer

Time series analysis often identifies several components such as trend, seasonal, and cyclical elements, but not all time series will have these components; however, the random (or irregular) component is generally present in all time series to some extent.

Question 16

If a manager is planning for an expansion of the factory,a forecast model with a long-term planning horizon would probably be used.•

Accepted Answer

Since the manager is planning for a long-term expansion, a forecast model with a long-term planning horizon would be more appropriate.

Question 17

The Gilbert Company chief financial officer has been tracking annual sales for each of the company's three divisions for the past 10 years.At a recent meeting,he pointed to the annual data and indicated that it clearly showed the seasonality associated with its business.Given the data,this statement may have been very appropriate.

Accepted Answer

Seasonality refers to periodic fluctuations that regularly occur in a predictable pattern based on the season of the year, not annual sales data. Annual data would show year-over-year changes but not seasonal variations within each year.

Question 18

If the historical data on which the model is being built consist of weekly data,the forecasting period would also be weekly.

Accepted Answer

If the historical data is in weekly periods, it makes sense to forecast in the same time periods for consistency and accuracy.

Question 19

A time-series graph shows that annual sales data have grown gradually over the past 10 years.Given this,if a linear trend model is used to forecast future years' sales,the sign on the regression slope coefficient will be positive.

Accepted Answer

A linear trend model assumes that there is a consistent and gradual increase or decrease in the data over time. Therefore, if the time-series graph shows that sales data have grown gradually over the past 10 years, the sign on the regression slope coefficient in a linear trend model will be positive, indicating continued growth in future years.

Question 20

An annual time series cannot exhibit a seasonal component.

Accepted Answer

The answer of An annual time series cannot exhibit a...

Quiz 16: Analyzing and Forecasting Time-Series Data