TABLE 16-12 A Local Store Developed a Multiplicative Time-Series Model to Forecast

question 116

Multiple Choice

TABLE 16-12
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 2005 to 2009. The following is the resulting regression equation:
log₁₀ = 6.102 + 0.012 X - 0.129 Q₁ - 0.054 Q₂ + 0.098 Q₃
where is the estimated number of contracts in a quarter.
X is the coded quarterly value with X = 0 in the first quarter of 2005.
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 16-12, the best interpretation of the coefficient of Q₂ (-0.054) in the regression equation is

• A) the revenues in the second quarter of a year is approximately 5.4% lower than the average over all 4 quarters.
• B) the revenues in the second quarter of a year is approximately 5.4% lower than it would be during the fourth quarter.
• C) the revenues in the second quarter of a year is approximately 11.69% lower than the average over all 4 quarters.
• D) the revenues in the second quarter of a year is approximately 11.69% lower than it would be during the fourth quarter.

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Definitions:

Positron

A positron is a subatomic particle with the same mass as an electron but a positive electric charge.

Beta Particle

A high-energy, high-speed electron or positron emitted by certain types of radioactive nuclei during radioactive decay.

Isotope

Variants of a particular chemical element which differ in neutron number, and consequently in mass, but share the same chemical properties.

Skeletal Remains

The framework of bone structures left after the soft tissues have decayed away, often analyzed in forensic and archaeological contexts.