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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Definitions:

Grignard Reagent

Organomagnesium compounds used in organic chemistry to form carbon-carbon bonds, represented by the formula RMgX.

Starting Material

The substances used at the beginning of a chemical synthesis which are transformed through chemical reactions to produce desired products.

Organic Product(s)

Chemical compounds and substances that are synthesized from organic molecules through various chemical reactions.

Reaction

A chemical process where substances interact to form new compounds or change into different substances, driven by the rearrangement of atomic bonds.