Gold Tracker Monitors the Price of Precious Metals and Has

question 10

Essay

Gold Tracker monitors the price of precious metals and has developed a forecasting model for the sales of gold: Q = 4,000 − 0.01P + 1.5C − 1.25X + 1.0S, where Q = weekly sales of gold (in millions of ounces), P is the price of gold (dollars per ounce), C is the most recent one-month report of the consumer price index of inflation (in percent), X is an index of the exchange rate of the U.S. dollar compared to seven other currencies, and S is the market price of an ounce of silver (dollars per ounce).
(a) Recently, the price of gold has been $380 per ounce, inflation was measured at 0.2% for the month, the dollar has been trading at 99.7 on the foreign exchange index, and silver has been steady at $9.50 per ounce. What is the expected quantity of gold traded per week?
(b) Forecast sales of gold for the next two weeks if gold’s price is expected to rise by 1% per week, inflation is expected to remain constant, the dollar is expected to fall by 5% per week, and the price of silver is expected to rise by 2% per week.

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Definitions:

IR

Infrared spectroscopy, a technique used to identify and study chemicals by analyzing their infrared light absorption patterns.

Broad

Descriptive of something with a wide scope, extent, or range; may refer to concepts or physical objects that cover a large area or numerous subjects.

Triplet

A term used in quantum mechanics and spectroscopy to describe a system or state with three closely related energy levels, or a spin state of a molecule in which two unpaired electrons have parallel spins.

Test-Statistic

A value calculated from sample data during a hypothesis test that is used to determine whether to reject the null hypothesis.