Instruction 14-5
a Local Store Developed a Multiplicative Time-Series Model $\hat { Y }$

question 127

Multiple Choice

Instruction 14-5
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:
log 10 $\hat { Y }$ = 6.102 + 0.012 X - 0.129 Q₁ - 0.054 Q₂ + 0.098 Q₃
Where
$\hat { Y }$ 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 Instruction 14-5,in testing the significance of the coefficient of X in the regression equation (0.012) which has a p-value of 0.0000.Which of the following is the best interpretation of this result?

• A)The quarterly growth rate in revenues is significantly different than 0% (? = 0.05).
• B)The quarterly growth rate in revenues is not significantly different than 1.2% (? = 0.05).
• C)The quarterly growth rate in revenues is not significantly different than 0% (? = 0.05).
• D)The quarterly growth rate in revenues is significantly different than 1.2% (? = 0.05).

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Definitions:

Interest Rate

The percentage charged on the total amount you borrow or earn on an investment, typically expressed annually.

Marketable Securities

Financial instruments that can be quickly converted into cash at a known price, such as stocks or bonds.

Optimal Initial Balance

The ideal starting amount of funds that maximizes the effectiveness or efficiency of a financial account or investment strategy.

BAT Model

Stands for the Best Alternative to a Negotiated Agreement; a benchmark used in negotiations to determine each party's alternative options if the current negotiations fail.