Instruction 14-16
Given Below Are Microsoft Excel Outputs for Various

question 137

Multiple Choice

Instruction 14-16
Given below are Microsoft Excel outputs for various estimated autoregressive (AR) models for a company’s real operating revenues (in billions of dollars) from 1985 to 2008. From the data, you also know that the real operating revenues for 2006, 2007 and 2008 are 11.7909, 11.7757 and 11.5537, respectively.
AR (1) Model:
$\begin{array}{|l|l|l|l|l|}\hline & \text { Coefficients } & \text { Standard Error } & \text { t Stat } & p \text {-value } \\\hline \text { Intercept } & 0.1802 & 0.3980 & 0.4528 & 0.6553 \\\hline \text { XLag1 } & 1.0112 & 0.0497 & 20.3526 & 0.0000 \\\hline\end{array}$

AR (2) Model:
$\begin{array}{|l|l|l|l|l|}\hline & \text { Coefficients } & \text { Standard Error } & \text { t Stat } & p \text {-value } \\\hline \text { Intercept } & 0.3005 & 0.4408 & 0.6817 & 0.5036 \\\hline \text { X Lag 1 } & 1.1732 & 0.2347 & 4.9980 & 0.0001 \\\hline \text { X Lag 2 } & -0.1830 & 0.2507 & -0.7300 & 0.4743 \\\hline\end{array}$

AR (3) Model:
$\begin{array}{|l|l|l|l|l|}\hline & \text { Coefficients } & \text { Standard Error } & \text { t Stat } & p \text {-value } \\\hline \text { Intercept } & 0.3130 & 0.5144 & 0.6085 & 0.5509 \\\hline \text { XLag1 } & 1.1737 & 0.2465 & 4.7617 & 0.0002 \\\hline \text { XLag2 } & -0.0694 & 0.3731 & -0.1860 & 0.8547 \\\hline \text { XLag3 } & -0.1221 & 0.2820 & -0.4330 & 0.6704 \\\hline\end{array}$

-Referring to Instruction 14-16,if you decide to use AR(3) ,what will the predicted real operating revenue for the company be in 2011?

• A) $11.84 billion
• B) $11.59 billion
• C) $12.47 billion
• D) $11.68 billion

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Definitions:

Estimate

An approximation or educated guess based on partial information or data.

Data

Information collected for reference or analysis, often numeric, but can be in various forms.

Outliers

Observations in a dataset that lie an abnormal distance from other values, often indicating variability or error.

Labeled Points

Data points that are assigned a label or category as part of a dataset, often used in machine learning and data analysis.