The following ratio-to-moving averages for the seasonally adjusted series were found by the decomposition method applied on a time series representing quarterly sales for the last three years: Which of the following is the seasonal index for the fourth quarter?
A) 1.3300
B) 1.3571
C) 1.3842
D) 1.2942

Question

The following ratio-to-moving averages for the seasonally adjusted series were found by the decomposition method applied on a time series representing quarterly sales for the last three years:  Which of the following is the seasonal index for the fourth quarter?
A) 1.3300 
B) 1.3571 
C) 1.3842 
D) 1.2942

Quizplus · Accepted Answer

The ratio-to-moving averages method is used to separate seasonal components from a time series. In this case, the seasonal index for the fourth quarter can be found by taking the ratio of the fourth quarter's average sales to the overall average sales for the entire year. The ratio for each quarter is shown in the table, and we can see that the ratio for the fourth quarter is 1.3571, which is closest to choice (B).

The Following Ratio-To-Moving Averages for the Seasonally Adjusted Series Were