Deseasonalizing a time series, Financial Management

Assignment Help:

Deseasonalizing a Time Series

The Ratio to Average Method allows us to identify the component of the seasonal variation in time series data and the indices themselves help us to nullify the effects of seasonality on the time series. The use of indices to nullify the seasonal effects in the common parlance is referred to as Deseasonalizing the time series. Deseasonalizing a time series involves dividing the original data points with the relevant seasonal index expressed as a percentage.

In our example, the deseasonalization process is carried out as follows.

Year

Quarter

Actual Data

Seasonal index/100

Deseasonalized data


(1)

(2)

(3)

(4)

(5) = (3)/(4)


1998

I

1

112.73/100

0.887

 

II

2

  98.41/100

2.032

 

III

2

118.10/100

1.693

 

IV

1

 70.77/100

1.413

The removal of the seasonal component helps us to analyze the components of secular, cyclical and irregular variations. The secular trend then obtained can be utilized for projecting the trend into the future.


Related Discussions:- Deseasonalizing a time series

Spot transaction hedge/Money market hedge, There are three parts to this qu...

There are three parts to this question. Please answer all parts. The Chicken Company, a company with headquarters in Switzerland, has a receivable of one million euro, which it wil

WACC, Keys Printing plans to issue a $1,000 par value, 10-year noncallable ...

Keys Printing plans to issue a $1,000 par value, 10-year noncallable bond with a 5.00% coupon, paid semiannually. It should sell at par. The company''''s marginal tax rate is 40.00

Integration of economic, a) Globalisation refers to the interdependence and...

a) Globalisation refers to the interdependence and integration of economic, social and politic issues (services, goods, people and capital), across the world. For example, consumer

Define limit of theory of comparative advantage is realistic, What consider...

What considerations might limit the extent to which the theory of comparative advantage is realistic? Answer: The theory of relative advantage was initially advanced by the ninet

What does high inflation have on the value of a business, What impact does ...

What impact does high inflation have on the value of a business? Besides causing distortion (as it unequally affects all goods and services), inflation enhances the uncertainty

Financial crisis , a)  Tonddu plc is expected to report record earnings of ...

a)  Tonddu plc is expected to report record earnings of £120m next year.  It has grown rapidly over the last few years, the growth has been achieved by maintaining a high level of

How much your investments will be worth at retirement time, Suppose you are...

Suppose you are planning to make regular contributions in equal payments to an investment fund for your retirement. Which formula would you use to figure out how much your investme

The selling process, The Selling Process The four key elements that con...

The Selling Process The four key elements that constitute the selling process are: (i) identification of prospective buyers, (ii) selection of the type of selling process to be

Difference between a parallel loan and back to back loan, Describe the diff...

Describe the difference between a parallel loan and a back-to-back loan. Answer:  A parallel loan contains four parties.  One MNC (multinational company) borrows and re-lends to

What is compound interest, What is compound interest? Compare compound inte...

What is compound interest? Compare compound interest to discounting. Compound interest takes place when interest is earned on interest and on the original principal of an inves

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd