Six years of quarterly data of a seasonally adjusted series are used to estimate

Question

Six years of quarterly data of a seasonally adjusted series are used to estimate a linear trend model as T^cap_t = 151.60 + 1.16f. In addition, quarterly seasonal indices are calculated as S^cap_j = 0.87, S^cap_2 = 0.81, S^cap_3 = 1.07, and S^cap_4 = 1.23. Interpret the first quarterly index. In other words, what is the value of the series in the first quarter as compared to the average? 87% above 13% above 87% below 13% below Interpret the fourth quarterly index. In other words, what is the value of the series in the fourth quarter as compared to the average? 77% above 77% below 23% below 23% above Make a forecast for all four quarters of next year. (Round your answers to 2 decimal places.)

Explanation / Answer

a-1) 13% below

1-2)23% above

b) from above given data as for next year quarter values are 25,26,27 and 28th

hence Quarter 1 =(151.6+1.16*25)*0.87=157.12

Quarter 2 =(151.6+1.16*26)*0.81=147.23

Quarter 3 =(151.6+1.16*27)*1.07=195.72

Quarter 4 =(151.6+1.16*28)*1.23=226.42

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