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

question 22

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 Q₃ (0.098) in the regression equation is

• A) the revenues in the third quarter of a year is approximately 9.8% higher than the average over all 4 quarters.
• B) the revenues in the third quarter of a year is approximately 9.8% higher than it would be during the fourth quarter.
• C) the revenues in the third quarter of a year is approximately 25.31% higher than the average over all 4 quarters.
• D) the revenues in the third quarter of a year is approximately 25.31% higher than it would be during the fourth quarter.

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Recognize and evaluate the legal implications of acting with scienter (knowledge of the falsehood), including in the context of fraudulent misrepresentation.

Understand the ethical and legal considerations in professional conduct, particularly relating to the legal profession.

Assess the role and importance of disclosure in contractual agreements.