A Time Series Regression Equation for a Surfboard Manufacturing Company

question 27

Multiple Choice

A time series regression equation for a surfboard manufacturing company in Australia is given below: Y = 35 + 4Q₁ + 0.5Q₃ + 8Q₄ + 3t
With t in quarters, 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 is the correct value of the estimate for the number of surfboards sold by this manufacturing company in March 2015?

• A) 86
• B) 90
• C) 93
• D) 51

---

Definitions:

Earnings Per Share

A financial metric that measures the total earnings available to shareholders divided by the number of shares outstanding.

Debt/Equity Ratio

A ratio demonstrating the comparative levels of shareholders' equity and borrowed funds deployed to finance company assets.

Residual Dividend Policy

A strategy where dividends paid to shareholders are based on earnings left over after all operational and project expenses are covered.

After-Tax Earnings

The amount of net income remaining after all taxes have been deducted, reflecting the company's profitability after fulfilling tax obligations.