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Consider the following time series data representing quarterly sales of dishwashers at Big Boys Appliances over the past two years:
The scatter plot of the data above shows seasonality with trend. Hence, a multiple regression model is run to forecast the demand. We denote sales (Y) as the depend variable, and denote time (t, with t = 1 represent the first quarter of 2010) and dummy variables (S2, S3, and S4) as independent variables. Here, we choose quarter 1 as the baseline and adopt three seasonality dummy variables, such that S2 = 1 represents quarter 2, S3 = 1 represents quarter 3, and S4 = 1 represents quarter 4. Answer the following questions. Use α = 0.05.
a. Use the above variable definition to code the data above.
b. Copy the data into Excel and run the corresponding multiple regression. Write the estimated multiple regression equation use the variables defined above.
c. Which variables in the current regression model are significant? And which are not significant? Justify your answer with p-values.
Sqeekers Co. issued 15-year bonds a year ago at a coupon rate of 8.1 percent. The bonds make semiannual payments and have a par value of $1,000. If the YTM on these bonds is 6.4 percent, what is the current bond price?
A borrower is purchasing a property for $300,000 and can choose between two possible loan alternatives. The first is a 90% loan for 20 years at 6.0% interest and the second is an 80% loan for 20 years at 5.0% interest. Assume the loan will be held to..
What is the present value of a growing perpetuity that makes a payment of $100 in the first year, which thereafter grows at 3% per year? Apply a discount rate of 7%.
explain the role of government in international trade the various levels of economic integration and the impact on
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In Sept. 2008, the IRS changed tax laws to allow banks to utilize the tax loss carry forwards of banks they acquire to shield their future income from taxes (prior law restricted the ability of acquirers to use these credits). what is the present val..
Pension funds pay lifetime annuities to recipients. If a firm will remain in business indefinitely, the pension obligation will resemble perpetuity. Suppose, therefore, that you are managing a pension fund with obligations to make perpetual payments ..
ABC and XYZ are all-equity firms. ABC has 1,750 shares outstanding at a market price of $20 a share. XYZ has 2,500 shares outstanding at a price of $28 a share. XYZ is acquiring ABC for $36,000 in cash. The incremental value of the acquisition is $3,..
1. What role do you think insurance companies play when it comes to pension funds and financial planning?
Saunders Corp. has a book net worth of $13,430. Long-term debt is $8,650. Net working capital, other than cash, is $3,305. Fixed assets are $17,830 and current liabilities are $1,810. How much cash does the company have? What is the value of the curr..
The Yurdone Corporation wants to set up a private cemetry business. According to the CFO, Barry M. Deep, business is "looking up". The company is somewhat unsure about the assumptions of a growth rate of 5.7 percent its cash flows. At what constant g..
Suppose your firm is owed an account receivable of C$1,000,000 due on Dec. 23, 2015. Treat this as a one-month hedge. Show how you would hedge this debt with: a money market hedge (use appropriate borrowing and lending rates),
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