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.

Question

Quizplus · Accepted Answer

Statement (i) is correct because t in the linear trend equation represents a time period. Statement (ii) is correct because the least squares method provides the best fitting line for the given data. However, statement (iii) is not correct because the linear trend equation developed using the least squares method can be used to forecast future values if the data follows a linear trend. Therefore, (i) and (ii) are correct but (iii) is not.

I in the Linear Trend Equation, T Is Any Value