Reference no: EM13184116
Consider a firm subject to quarter-to-quarter variation in its sales. Suppose that the following equation was estimated using quarterly data for the period 2006-2013 (the time variable goes from 1 to 32). The variables D1, D2 and D3 are , respectively, dummy variables for the first , second, and third quarters (e.g., D is equal to 1 in the first quarter and 0 otherwise). Q1= a+bt+c1D1 +c2 D2 + c3 D3
The results of the estimation are presented here:
Dependent Variable: QT R-SQUARE F-RATIO P-VALUE ON F
OBSERVATION: 32 0.9817 361.133 0.0001
PARAMETER STANDARD
VARIABLE ESTIMATE ERROR T-RATIO P-VALUE
INTERCEPT 51.234 7.16 7.15 0.0001
T 31.127 0.524 5.97 0.0001
D1 -11.716 2.717 -4.31 0.0002
D2 -.1.424 0.636 -2.24 0.0985
D3 -17.367 2.112 -8.22 0.0001
A. At the 5 percent level of significance perform t- and F-tests to check for statistical significance of the coefficients and the equation. Discuss also the significance for the coefficients and equation in terms of p-values. For a level with 27 (32-5) t = 2.052 a:t=7.15>2.052 statistically significant at 5%. b:t5.97>2.052statistically significant at 5%. C1 / t/ = /-4.31/> 2.052statistically significant at 5%.
B. Calculate the intercept in each of the four quarters. What do these values imply?
C. Use this estimated equation to forecast sales in the four quarters of 2014.