Deck 16: Time-Series Forecasting

Question 1

True or False: Given a data set with 15 yearly observations, there are only thirteen 3-year
moving averages.

Answer 1

True

Question 2

Which of the following is not an advantage of exponential smoothing?

A) It enables you to perform one-period ahead forecasting.
B) It enables you to perform more than one-period ahead forecasting.
C) It enables you to smooth out seasonal components.
D) It enables you to smooth out cyclical components.

Answer 2

B

Question 3

The overall upward or downward pattern of the data in an annual time series will be
Contained in the ____________ component.

A) trend
B) cyclical
C) irregular
D) seasonal

Answer 3

A

Question 4

Which of the following methods should not be used for short-term forecasts into the future?

A) Exponential smoothing
B) Moving averages
C) Linear trend model
D) Autoregressive modeling

Question 5

Based on the following scatter plot, which of the time-series components is not present in
This quarterly time series?

A)Trend
B)Seasonal
C)Cyclical
D)Irregular

Question 6

When using the exponentially weighted moving average for purposes of forecasting rather
Than smoothing,

A) the previous smoothed value becomes the forecast.
B) the current smoothed value becomes the forecast.
C) the next smoothed value becomes the forecast.
D) None of the above.

Question 7

A model that can be used to make predictions about long-term future values of a time series
Is

A) linear trend.
B) quadratic trend.
C) exponential trend.
D) All of the above.

Question 8

True or False: If a time series does not exhibit a long-term trend, the method of exponential
smoothing may be used to obtain short-term predictions about the future.

Question 9

When a time series appears to be increasing at an increasing rate, such that percentage
Difference from value to value is constant, the appropriate model to fit is the

A)linear trend.
B)quadratic trend.
C)exponential trend.
D)None of the above.

Question 10

You need to decide whether you should invest in a particular stock.You would like to invest
If the price is likely to rise in the long run.You have data on the daily mean price of this
Stock over the past 12 months.Your best action is to

A) compute moving averages
B) perform exponential smoothing
C) estimate a least square trend model
D) compute the MAD statistic

Question 11

The fairly regular fluctuations that occur within each year would be contained in the
_________________ component.

A) trend
B) cyclical
C) irregular
D) seasonal

Question 12

True or False: A trend is a persistent pattern in annual time-series data that has to be
followed for several years.

Question 13

True or False: Given a data set with 15 yearly observations, a 3-year moving average will
have fewer observations than a 5-year moving average.

Question 14

True or False: Given a data set with 15 yearly observations, there are only seven 9-year
moving averages.

Question 15

The annual multiplicative time-series model does not possess _______ component.

A) a trend
B) a cyclical
C) an irregular
D) a seasonal

Question 16

Which of the following statements about the method of exponential smoothing is not true?

A) It gives greater weight to more recent data.
B) It can be used for forecasting.
C) It uses all earlier observations in each smoothing calculation.
D) It gives greater weight to the earlier observations in the series.

Question 17

Which of the following statements about moving averages is not true?

A) It can be used to smooth a series.
B) It gives equal weight to all values in the computation.
C) It is simpler than the method of exponential smoothing.
D) It gives greater weight to more recent data.

Question 18

After estimating a trend model for annual time-series data, you obtain the following residual
Plot against time, the problem with your model is that:

A) The cyclical component has not been accounted for.
B) The seasonal component has not been accounted for.
C) The trend component has not been accounted for.
D) The irregular component has not been accounted for.

Question 19

The effect of an unpredictable, rare event will be contained in the ___________ component.

A) trend
B) cyclical
C) irregular
D) seasonal

Question 20

The method of moving averages is used

A) to plot a series.
B) to exponentiate a series.
C) to smooth a series.
D) in regression analysis.

Question 21

Question 22

Question 23

True or False: MAD is the summation of the residuals divided by the sample size.

Question 24

True or False: Each forecast using the method of exponential smoothing depends on all the
previous observations in the time series.

Question 25

True or False: A least squares linear trend line is just a simple regression line with the years
recoded.

Question 26

The method of least squares is used on time-series data for

A) eliminating irregular movements.
B) deseasonalizing the data.
C) obtaining the trend equation.
D) exponentially smoothing a series.

Question 27

SCENARIO 16-1
Referring to Scenario 16-1, does there appear to be a relationship between year and the
Number of cases of wine sold?

A) No, there appears to be no relationship between the year and the number of cases of wine sold by the vintner.
B) Yes, there appears to be a slight negative linear relationship between the year and the number of cases of wine sold by the vintner.
C) Yes, there appears to be a slight positive relationship between the year and the number of cases of wine sold by the vintner.
D) Yes, there appears to be a negative nonlinear relationship between the year and the number of cases of wine sold by the vintner.

Question 28

True or False: The principle of parsimony indicates that the simplest model that gets the job
done adequately should be used.

Question 29

After estimating a trend model for annual time-series data, you obtain the following residual
Plot against time, the problem with your model is that

A) the cyclical component has not been accounted for.
B) the seasonal component has not been accounted for.
C) the trend component has not been accounted for.
D) the irregular component has not been accounted for.

Question 30

SCENARIO 16-1
Referring to Scenario 16-1, set up a scatter diagram (i.e., a time-series plot)with year on the
horizontal X-axis.

Question 31

Which of the following terms describes the up and down movements of a time series that
Vary both in length and intensity?

A) Trend
B) Cyclical component
C) Irregular component
D) Seasonal component

Question 32

Question 33

True or False: In selecting a forecasting model, you should perform a residual analysis.

Question 34

Which of the following terms describes the overall long-term tendency of a time series?

A) Trend
B) Cyclical component
C) Irregular component
D) Seasonal component

Question 35

True or False: The MAD is a measure of the mean of the absolute discrepancies between the
actual and the fitted values in a given time series.

Question 36

True or False: The method of least squares may be used to estimate both linear and
curvilinear trends.

Question 37

The following is the list of MAD statistics for each of the models you have estimated from
Time-series data:

A) linear trend.
B) quadratic trend.
C) exponential trend.
D) second-order autoregressive.

Question 38

SCENARIO 16-2
True or False: Referring to Scenario 16-2, advertising expenditures appear to be increasing
in a linear rather than curvilinear manner over time.

Question 39

SCENARIO 16-2
Referring to Scenario 16-2, set up a scatter plot (i.e., time-series plot)with months on the
horizontal X-axis.

Question 40

The cyclical component of a time series

A) represents periodic fluctuations which reoccur within 1 year.
B) represents periodic fluctuations which usually occur in 2 or more years.
C) is obtained by adjusting for the seasonal variation.
D) is obtained by adjusting for calendar variation.

Question 41

SCENARIO 16-3
Referring to Scenario 16-3, if a three-month moving average is used to smooth this series,
What would be the second calculated value?

A) 36
B) 40.5
C) 54
D) 72

Question 42

SCENARIO 16-3
Referring to Scenario 16-3, if this series is smoothed using exponential smoothing with a
Smoothing constant of 1/3, what would be the third value?

A) 53
B) 65.33
C) 68
D) 81

Question 43

SCENARIO 16-3
Referring to Scenario 16-3, if this series is smoothed using exponential smoothing with a
Smoothing constant of 1/3, how many values would it have?

A) 3
B) 4
C) 5
D) 6

Question 44

SCENARIO 16-3
Referring to Scenario 16-3, if this series is smoothed using exponential smoothing with a
Smoothing constant of 1/3, what would be the first value?

A) 36
B) 39
C) 42
D) 45

Question 45

SCENARIO 16-14
Referring to Scenario 16-14, using the regression equation, which of the following values
Is the best forecast for the number of contracts in the second quarter of 2015?

A) 144,212
B) 391,742
C) 1,238,797
D) 4,355,119

Question 46

SCENARIO 16-3
Referring to Scenario 16-3, if a three-month moving average is used to smooth this series,
How many values would it have?

A) 2
B) 3
C) 4
D) 5

Question 47

SCENARIO 16-3
Referring to Scenario 16-3, if this series is smoothed using exponential smoothing with a
Smoothing constant of 1/3, what would be the second value?

A) 39
B) 42
C) 45
D) 53

Question 48

SCENARIO 16-3
Referring to Scenario 16-3, suppose the last two smoothed values are 81 and 96 (Note: they
Are not).What would you forecast as the value of the time series for September?

A) 81
B) 86
C) 91
D) 96

Question 49

SCENARIO 16-14

Question 50

SCENARIO 16-3
Referring to Scenario 16-3, if a three-month moving average is used to smooth this series,
What would be the last calculated value?

A) 72
B) 93
C) 114
D) 126

Question 51

SCENARIO 16-14

Question 52

SCENARIO 16-14
Referring to Scenario 16-14, to obtain a forecast for the first quarter of 2014 using the
Model, which of the following sets of values should be used in the regression equation?

Question 53

SCENARIO 16-5
The number of passengers arriving at San Francisco on the Amtrak cross-country express on 6
successive Mondays were: 60, 72, 96, 84, 36, and 48.
Referring to Scenario 16-5, the number of arrivals will be smoothed with a 5-term moving
average.The first smoothed value will be __________.

Question 54

SCENARIO 16-3
Referring to Scenario 16-3, suppose the last two smoothed values are 81 and 96 (Note: they
Are not).What would you forecast as the value of the time series for July?

A) 81
B) 86
C) 91
D) 96

Question 55

SCENARIO 16-14
Referring to Scenario 16-14, the best interpretation of the coefficient of X (0.117)in the
Regression equation is:

A) the quarterly compound growth rate in contracts is around 30.92%.
B) the annually compound growth rate in contracts is around 30.92%.
C) the quarterly compound growth rate in contracts is around 11.7%.
D) the annually compound growth rate in contracts is around 11.7%.

Question 56

SCENARIO 16-5
The number of passengers arriving at San Francisco on the Amtrak cross-country express on 6
successive Mondays were: 60, 72, 96, 84, 36, and 48.
Referring to Scenario 16-5, the number of arrivals will be smoothed with a 3-term moving
average.The first smoothed value will be __________.

Question 57

SCENARIO 16-14
Referring to Scenario 16-14, to obtain a forecast for the fourth quarter of 2014 using the
Model, which of the following sets of values should be used in the regression equation?

Question 58

SCENARIO 16-5
The number of passengers arriving at San Francisco on the Amtrak cross-country express on 6
successive Mondays were: 60, 72, 96, 84, 36, and 48.
Referring to Scenario 16-5, the number of arrivals will be smoothed with a 3-term moving
average.There will be a total of __________ smoothed values.

Question 59

SCENARIO 16-14
Referring to Scenario 16-14, using the regression equation, which of the following values
Is the best forecast for the number of contracts in the third quarter of 2014?

A) 49,091
B) 133,352
C) 421,697
D) 1,482,518

Question 60

SCENARIO 16-5
The number of passengers arriving at San Francisco on the Amtrak cross-country express on 6
successive Mondays were: 60, 72, 96, 84, 36, and 48.
Referring to Scenario 16-5, the number of arrivals will be smoothed with a 3-term moving
average.The last smoothed value will be __________.

Question 61

SCENARIO 16-14