A Time Series Regression Equation Measuring the Number of Surfboards

question 59

Multiple Choice

A time series regression equation measuring the number of surfboards sold by a surfboard manufacturing company in Australia is given below:
Y = 35 + 4Q₁ + 0.5Q₃ + 8Q₄ + 3t
With t in quarters and the origin is December 2010 and Q₁ is the indicator variable for March, Q₃ is the indicator variable for September and Q₄ is the indicator variable for December.
Which of the following statements is correct?

• A) The coefficients of the indicator variables are all positive because the June Quarter has the lowest sales of surfboards.
• B) The coefficients of the indicator variables are all positive because sales of surfboards in the March, September and December quarter are all above June.
• C) The coefficients of the indicator variables are all positive indicating that the June quarter is seasonally disadvantaged for selling surfboards due to winter in Australia in this quarter.
• D) All of these choices are correct.

Determine the investment turnover and understand its implications for business performance.

Calculate and interpret profit margin for divisions or companies.

Identify the responsibilities and performance measures of investment centers.

Apply concepts of residual income in evaluating business performance.

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