Instruction 14-6
a Local Store Developed a Multiplicative Time-Series Model $$\log _ { 10 } \hat { Y } = 6.102 + 0.012 X - 0.129 Q _ { 1 } - 0.054 Q _ { 2 } + 0.098 Q _ { 3 }$$

question 55

Short Answer

Instruction 14-6
A local store developed a multiplicative time-series model to forecast its revenues in future quarters, using quarterly data on its revenues during the four-year period from 2005 to 2009. The following is the resulting regression equation:
$$\log _ { 10 } \hat { Y } = 6.102 + 0.012 X - 0.129 Q _ { 1 } - 0.054 Q _ { 2 } + 0.098 Q _ { 3 }$$
Where
$X$ is the coded quarterly value with $X = 0$ in the first quarter of 2005 .
$Q _ { 1 }$ is a dummy variable equal to 1 in the first quarter of a year and 0 otherwise.
$Q _ { 2 }$ is a dummy variable equal to 1 in the second quarter of a year and 0 otherwise.
$Q _ { 3 }$ is a dummy variable equal to 1 in the third quarter of a year and 0 otherwise.
-Referring to Instruction 14-6,using the regression equation,what is the forecast for the revenues in the third quarter of 2003?

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Definitions:

Marginal Rate of Substitution

The rate at which a consumer is willing to give up one good in exchange for another good while maintaining the same level of satisfaction.

Treasury Securities

Government debt instruments issued by the Treasury Department of a country to fund its national debt and finance government spending.

Stock Market

A marketplace where stocks (shares of ownership in companies) are bought and sold, typically through exchanges.

Risk-Free Rate of Return

The theoretical rate of return of an investment with zero risk, often represented by the yield on government bonds.