REVIEW QUESTIONS ON TIME SERIES (2/1/23)

1. Catherine is a financial analyst who works at ABC Company. She wants to

analyze her financial statements. However, she finds herself in dilemma on
what data she can use. As an econometrician what would you advise Catherine
in these scenarios? Give justifications to your answer.
a. Comparing financial statements of ABC company with XYZ company in
2021.
b. Analyzing the trend and performance of XYZ company since its
inauguration.

2. Explain the main components of time series data. Which of these would be most
prevalent in data relating to inflation?

3. The least-squares trend line for an annual time series containing 40

observations (from 1961 to 2000) on real net sales (in billions of constant 1995
dollars) is: Y = 1.2 + 0.5Xi
a. Interpret the Y intercept, b0, in this linear trend model
b. Interpret the slope, b1 , in this linear trend model

4. a. What is time series?

b. What will be the form of trend equation when trend is linear?
c. The trend line equation of a time series with middle year 2007 is given by
Y = 95 + 3. 9t.
Estimate a trend value for the year 2015. Also eliminate the trend
assuming the actual value to be 125. 2
d. Mention the components of a time series.