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Basic Question 3 of 9

A linear trend for time series data beginning in 2006 and extending up through 2011 (data for 6 years) is Y-hat = 5.2 + 3.1t. The forecast for 2012 is

A. 23.8
B. 26.9
C. 30.0
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User Contributed Comments 3

User Comment
vi2009 got tricked! forecast for 2012 ... so t = 7
jazzguitar I don't understand why t = 7.
2006 = 0
2007 = 1
2008 = 2
2009 = 3
2010 = 4
2011 = 5
2012 = 6

?
myron @jazzguitar: 2006 is year 1.
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Lina

Lina

Learning Outcome Statements

calculate and evaluate the predicted trend value for a time series, modeled as either a linear trend or a log-linear trend, given the estimated trend coefficients;

describe factors that determine whether a linear or a log-linear trend should be used with a particular time series and evaluate limitations of trend models;

explain the requirement for a time series to be covariance stationary and describe the significance of a series that is not stationary;

CFA® 2025 Level II Curriculum, Volume 1, Module 5.