Exam 16: Decision Making and Payoff Tables in Investment Scenarios

i. In the linear trend equation, t is any value that corresponds with a time period, i.e., month or Quarter. ii. The least squares method of computing the equation for a straight line going through the data of Interest gives the "best fitting" line. iii. If the sales, production or other data over a period of time tend to approximate a straight-line Trend, the equation developed by the least squares method cannot be used to forecast sales for a Future period.

The following table lists the average price of home listings in Canada from January 2007 to January 2014. (See Connect for Data Set 7: CREA 2014). Forecast the average home price listing for Jan-14.

The merchants in Morris, Manitoba suffered flood damage in May 1997. Stores were closed for Remodeling nearly two months. What is this type of variation in sales called?

Listed below is the net sales in $ million for Home Depot Inc., and its subsidiaries from 1994 to 2003. Using the printout below, what are the estimated sales for 2004?

i. The moving average method merely smooths out the fluctuations in the data. ii. The moving average method averages out cyclical (C) and irregular (I) components. iii. Sales, production and other economic and business series usually have periods of oscillation that Are of equal length or identical amplitudes.

If the least squares equation for sales data is ŷ = 10 + 1.3t ($ millions), with t = 0 in 1995, what is the Value of t and the forecast for 2002?

i. If the sales, production or other data over a period of time tend to approximate a straight-line Trend, the equation developed by the least squares method cannot be used to forecast sales for a Future period. ii. A straight-line trend equation is used to represent the time series when it is believed that the data Is increasing (or decreasing) by equal amounts, on the average, from one period to another. iii. If the past data approximates a straight line, the equation used is = a + bt, where a is the y- Intercept and b is the slope of the line.

How can you describe the moving average method?

If you have annual data for 1991 to 2002 and want to code the years for the calculation of the trend, What should you code the year 1991?

You are trying to decide in which of the three companies you should invest. Refer to the following Payoff Table. If the probability of the market declining in the next year is 0.5, which of the following statements Are correct? i. The Expected value of stock purchased under conditions of certainty is $1,675. ii. The Expected value of perfect information is $75. iii. The Expected value of perfect information is $180.

You are trying to decide in which of the three companies you should invest. Refer to the following Payoff Table. If the market rises in the next year, which of the following statements are correct? i. The Opportunity Loss for Company A is $200. ii. The Opportunity Loss for Company B is $200. iii. The Opportunity Loss for Company C is $200.