Time Series Analysis: MCQs & Short Problems
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Question 1.
If the errors produced by a forecasting method for 3 observations are +3, +3 and -3, then what is the mean absolute deviation?
Answer
9
0
3
-3
Question 2
If the errors produced by a forecasting method for 3 observations are +3, +3 and -3, then what is the mean squared error?
Answer
9
0
3
-3
Question 3
A restaurant has been experiencing higher sales during the weekends of compared to the weekdays. Daily restaurant sales patterns for this restaurant over a week are an example of _________ component of time series.
Answer
Trend
Seasonal
Cyclical
Irregular
Question 4
_________ component of time series refers to the erratic time-series movement that follow no recognizable or regular pattern.
Answer
Trend
Seasonal
Cyclical
Irregular
Question 5
The demand for a product for the last six years has been 15, 15, 17, 18, 20, and 19. The manager wants to predict the demand for this time series using the following simple linear trend equation: trt = 12 + 2t. What are the forecast errors for the 5th and 6th years?
Answer
0, -3
0, +3
+2, +5
-2, -5
Question 6
In general, the number of dummy variables used to model constant seasonal variation is equal to the number of
Answer
seasons
seasons minus 1
seasons plus 1
seasons minus 2
Question 7
When the magnitude of the seasonal swing does not depend on the level of a time series, we call this _________ variation.
Answer
Increasing seasonal
Cyclical seasonal
Constant seasonal
Decreasing seasonal
Question 8
When a forecaster uses the _________________ method she or he assumes that the time series components are changing quickly over time.
Answer
Time series regression
Simple exponential smoothing
Box and Jenkins method
Multiplicative decomposition method
Question 9
A major drawback of the aggregate price index is that
Answer
It does not take into account the fact that some items in the market basket are purchased more frequently than others.
It is difficult to compute.
It is computed by using the values from a single time series or based on a single product.
Percentage comparisons cannot be made to the base year.
Question 10
Which of the following time-series forecasting methods would not be used to forecast a time series that exhibits a linear trend with no seasonal or cyclical patterns?
Answer
Dummy variable regression
Linear trend regression
Holt Winter's double exponential smoothing
Multiplicative Winter's method
Both A and D
Question 11
Use the following to answer the questions:
Week Revenue Forecasted Revenue
1 200 225
2 240 220
3 300 285
4 270 290
5 230 250
6 260 240
7 210 250
8 275 240
a. Compute the total error (sum of the error terms).
b. Compute the mean squared error (deviation).
Answer
Question 12
The linear trend equation for the following data is ŷ=1.4286+2.5(t)
Month Value of Fund
1 4
2 6
3 9
4 12
5 14
6 16
7 19
a. What is the predicted value of the fund in the period t=1?
b. What is the predicted value of the fund in the period 3, and period 7?
c. Find the residual values (error) for period 3, and period 7.
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Solution Summary
The solution provides answers to multiple choice questions on time series analysis and step by step method for the calculation of trend for a time series model. Formula for the calculation and Interpretations of the results are also included. Relevant workings for multiple choice questions are also included.
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