Cyclical variation in time series analysis, Financial Management

Cyclical Variation

By cyclical variations, we refer to the long-term movement of the variable about the trend line. Therefore, does the movement of the actual series about a trend line observed in figure (1) suggest a pattern of cyclical variation? Yes, it does. A more appropriate example of cyclical variation would be the pattern of business cycle. The whole cycle encompassing the phenomena of the business activity reaching a high, its gradual slow down, a depression and then the recovery can be observed. But one of the points to which we have to pay attention is that the business and the economic cycles may not be periodic in nature. That is, in two different business cycles, at equal intervals of time, the pattern observed may be different.

Generally, the behavior of the variable is considered to be cyclic, only if the movements recur after a period of more than one year. The cyclical variation is shown in the figure.

Figure 

1579_cyclical variation.png

In the figure, we observe the component of the time series moving towards and away from the secular trend.

Posted Date: 9/17/2012 3:28:47 AM | Location : United States







Related Discussions:- Cyclical variation in time series analysis, Assignment Help, Ask Question on Cyclical variation in time series analysis, Get Answer, Expert's Help, Cyclical variation in time series analysis Discussions

Write discussion on Cyclical variation in time series analysis
Your posts are moderated
Related Questions
Q. What do you signify by Cost of Capital? What do you signify by 'Cost of Capital'? What is its meaning and what are the problems in determination of cost of capital? Ans.

Suppose you can decrease the cash on hand and the company will require holding Net Working Capital (including cash) equal to 4% of the next year's sales going forward.  This will r

Q. Explain Net Present Value Method? Net Present Value (NPV) Method: - This process measures the Present value of returns per rupee invested. In this method present value of

Put option is the right of the investor which he may exercise on the date at the put price given in the indenture. Normally, put price is in par value. When yield rises

Explain the structure of financial systems In direct finance borrower-spenders borrow funds straight from lenders in the financial markets by selling them securities. In indire

Talbot Enterprises recently reported an EBITDA of $8 million and net income of $2.4 million. It had $2.0 million of interest expense, and its corporate tax rate was 40%. What was i

What are the main flaws of the profit maximisation criterion The main technical flaws of this criterion are i) ambiguity, ii) quality of benefits and iii) timing of be

Determine the term- Profit before taxation and interest Profit before taxation and interest can also be used here in addition to profit for the period. Whichever figure is tak

The Nu-Nu Brothers Inc. (NNBI) has the following capital structure, which it considers to be optional: Debt 25% Preferred Stock 15% Common Equity 60% NNBI''''s expected net income

What are the pros and cons of commercial paper relative to bank loans for a company seeking short-term financing? Commercial paper is generally a cheaper source of short-term fin