I the Irregular Component of a Time Series Is the Easiest

question 40

Multiple Choice

i. The irregular component of a time series is the easiest to measure. ii. The ratio-to-moving average method removes the time series trend component, resulting in 12 numbers that are called specific seasonals.
iii. For a quarterly time series, the initial step, using the ratio-to-moving average method, is to remove the seasonal components from the time series using a 3-month centered moving average.

• A) (i), (ii), and (iii) are all correct statements.
• B) (i) and (ii) are incorrect statements but (iii) is correct.
• C) (i) and (iii) are correct statements but not (ii).
• D) (ii) and (iii) are correct statements but not (i).
• E) (i), (ii), and (iii) are all false statements.

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Definitions:

Total Debt

The sum of all short-term and long-term liabilities owed by an entity.

Weighted Average

A calculation that takes into account the varying degrees of importance of the numbers in a data set.

Cost of Capital

The rate of return that a company must earn on its projects to maintain its market value and attract investment.

M&M Proposition I

A theory in corporate finance that states the value of a firm is unaffected by how it is financed, in the absence of taxes, bankruptcy costs, and asymmetric information.