SCENARIO 16-13 Given Below Is the Monthly Time Series Data for U.S.retail

question 22

True/False

SCENARIO 16-13
Given below is the monthly time series data for U.S.retail sales of building materials over a specific year.
The results of the linear trend,quadratic trend,exponential trend,first-order autoregressive,second-order autoregressive and third-order autoregressive model are presented below in which the coded month for the 1^st month is 0:
Linear trend model:

Quadratic trend model:
Third-order autoregressive::

Below is the residual plot of the various models:

-Referring to Scenario 16-13,you can conclude that the third-order autoregressive model is appropriate at the 5% level of significance.

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Definitions:

Amortization

The process of spreading the cost of an intangible asset over its useful life.

Investing Activities

Financial actions related to acquiring or disposing of long-term assets and investments, a component of a company's cash flow statement.

Indirect Method

A technique used in cash flow statements to convert net income into net cash flow from operating activities, by adjusting for non-cash transactions.

Direct Method

A cash flow statement approach that involves listing all major operating cash receipts and payments to calculate net cash from operating activities.