TABLE 16-13 A Local Store Developed a Multiplicative Time-Series Model to Forecast

question 6

Multiple Choice

TABLE 16-13
A local store developed a multiplicative time-series model to forecast its revenues in future quarters, using quarterly data on its revenues during the 4-year period from 1998 to 2002. The following is the resulting regression equation:
log₁₀Y^{^} = 6.102 + 0.012 X - 0.129 Q₁ - 0.054 Q₂ + 0.098 Q₃
where
Y^{^} is the estimated number of contracts in a quarter
X is the coded quarterly value with X = 0 in the first quarter of 1998.
Q₁ is a dummy variable equal to 1 in the first quarter of a year and 0 otherwise.
Q₂ is a dummy variable equal to 1 in the second quarter of a year and 0 otherwise.
Q₃ is a dummy variable equal to 1 in the third quarter of a year and 0 otherwise.
-Referring to Table 16-13, the best interpretation of the coefficient of X (0.012) in the regression equation is

• A) the annual growth rate in revenues is around 2.8%.
• B) the annual growth rate in revenues is around 1.2%.
• C) the quarterly compound growth rate in revenues is around 2.8%.
• D) the quarterly growth rate in revenues is around 1.2%.

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