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

question 18

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, to obtain a forecast for the first quarter of 2009 using the model, which of the following sets of values should be used in the regression equation?

• A) X = 16, Q₁ = 1, Q₂ = 0, Q₃ = 0
• B) X = 16, Q₁ = 0, Q₂ = 1, Q₃ = 0
• C) X = 17, Q₁ = 1, Q₂ = 0, Q₃ = 0
• D) X = 17, Q₁ = 0, Q₂ = 1, Q₃ = 0

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Definitions:

Distortion

The alteration of reality or perception in a way that leads to misconception or a skewed understanding.

Denial

A defense mechanism where an individual refuses to accept reality or facts, thereby avoiding facing uncomfortable truths.

Psychological Protections

Mechanisms or strategies used by individuals to defend themselves against perceived threats to their emotional well-being or self-esteem.

Identity Crisis

A period of uncertainty and confusion in which a person's sense of identity becomes insecure, often leading to a reassessment of values and direction in life.