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

Lewis model of economic development, Question 1: (i) Critically explai...

Question 1: (i) Critically explain and analyse the Lewis model of economic development. (ii) Compare and contrast the neoclassical growth model and the new growth theory.

Weighted average cost of capital of firm, Weighted average cost of capital ...

Weighted average cost of capital of Firm: Use the following information to answer the questions. Security Beta Expected retur

Inflation and exchange rates, Inflation and Exchange Rates To understan...

Inflation and Exchange Rates To understand the impact of inflation, several terms should be understood. For example, inflation from the investors' standpoint must be clearly de

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

Define the straight fixed-rate bond, Define the Straight fixed-rate bond ...

Define the Straight fixed-rate bond Straight fixed-rate bond issues comprise a designated maturity date at which the principal of the bond issue is guaranteed to be repaid.  Th

Functional areas of financial management, FUNCTIONAL AREAS OF FINANCIAL MAN...

FUNCTIONAL AREAS OF FINANCIAL MANAGEMENT The scope of financial management is all pervasive and covers approximately all the functional areas of an organization. A number of t

Explain speculator - market participants, Explain Speculator - Market Parti...

Explain Speculator - Market Participants A speculator attempts to profit from a modification in the futures price. For doing this, the speculator will take a long or short posi

Explain the asset substitution effect, Question: a. Explain what the de...

Question: a. Explain what the debt overhang problem is (following the lines of Myers 1977) make sure that you specify what the relevant conflict of interest is and what are the

Future value, you just started your first job, and you want to buy a house ...

you just started your first job, and you want to buy a house within 3 years. you are currently saving for the down payment. you plan to save $5,000 the first year. You also anticip

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