The Quarterly Numbers of Applications for Home Mortgage Loans at a Branch

question 11

Essay

The quarterly numbers of applications for home mortgage loans at a branch office of a large bank are recorded in the table below.
-Analysts are looking at data in select technology industries during the first decade of the century before forecasting possible trends in the second decade. Below is data for startups in one industry in the years 2005-2010.
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(A) Perform a runs test and compute a few autocorrelations to determine whether this time series is random.
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(B) Obtain a time series chart. Which of the exponential smoothing models do you think should be used for forecasting based on this chart? Why?
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(C) Use simple exponential smoothing to forecast these data, using no holdout period and requesting 4 quarters of future forecasts. Use the default smoothing constant of 0.10.
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(D) Repeat (C), optimizing the smoothing constant. Does it make much of an improvement?

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Definitions:

Americans with Disabilities Act (ADA)

A civil rights law that prohibits discrimination against individuals with disabilities in all areas of public life, including jobs, schools, transportation, and all public and private places that are open to the general public.

Compensatory Damages

Financial compensation awarded to a plaintiff to offset injuries or losses caused by the defendant's actions.

Injunctive Relief

A legal remedy in the form of a court order requiring a party to do or refrain from doing specific acts, used to prevent irreparable harm or to preserve the status quo.

Federal Employee Polygraph Protection Act

A United States federal law enacted in 1988 that prohibits most private employers from using lie detector tests, either for pre-employment screening or during the course of employment.