A Time Series Regression Equation Measuring the Number of Surfboards

question 49

Multiple Choice

A time series regression equation measuring the number of surfboards sold by a surfboard manufacturing company in Australia is given below:
Y = 35 + 4Q₁ + 0.5Q₃ + 8Q₄ + 3t
With t in quarters and 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 statements is correct regarding the trend component?

• A)There were 43 surfboards sold in December 2010, and this increases by 3 surfboards per quarter, irrespective of the season of the year.
• B)There were 35 surfboard sold in December 2010, and this increases by 15.5 surfboards per quarter, irrespective of the season of the year.
• C)There were 35 surfboard sold in December 2010, and this increases by 3 surfboards per quarter, irrespective of the season of the year.
• D)None of these choices are correct.

Understand the concepts of time value of money.

Comprehend the impact of compounding frequency on present and future values.

Familiarize with the definitions and characteristics of annuities, perpetuities, and amortized debt.

Recognize the relationship between present value, future value, and the discount rate.

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