# MISCELLANEOUS EXERCISE - 4 -Choose the correct alternative.

1. Which of the following can’t be a component of a time series?
(a) Seasonality        (b) Cyclical       (c) Trend        (d) Mean

2. The first step in time series analysis is to
(a) Perform regression calculations
(b) Calculate a moving average
(c) Plot the data on a graph
(d) Identify seasonal variation

3. Time-series analysis is based on the assumption that
(a) Random error terms are normally distributed.
(b) The variable to be forecast and other independent variables are correlated.
(c) Past patterns in the variable to be forecast will continue unchanged into the future.
(d) The data do not exhibit a trend.

4. Moving averages are useful in identifying
(a) Seasonal component
(b) Irregular component
(c) Trend component
(d) Cyclical component

5. We can use regression line for past data to forecast future data. We then use the line which
(a) Minimizes the sum of squared deviations of past data from the line
(b) Minimizes the sum of deviations of past data from the line.
(c) Maximizes the sum of squared deviations of past data from the line
(d) Maximizes the sum of deviations of past data from the line.

6. Which of the following is a major problem for forecasting, especially when using the method of least squares?
(a) The past cannot be known
(b) The future is not entirely certain
(c) The future exactly follows the patterns of the past
(d) The future may not follow the patterns of the past

7. An overall upward or downward pattern in an annual time series would be contained in which component of the times series
(a) Trend          (b) Cyclical         (c) Irregular        (d) Seasonal

8. The following trend line equation was developed for annual sales from 1984 to 1990 with 1984 as base or zero year.
Y1 = 500 + 60X (in 1000 Rs). The estimated sales for 1984 (in 1000 Rs) is:
(a) Rs 500       (b) Rs 560      (c) Rs 1,040      (d) Rs 1,100

9. What is a disadvantage of the graphical method of determining a trend line?
(a) Provides quick approximations
(b) Is subject to human error
(c) Provides accurate forecasts
(d) Is too difficult to calculate

10. Which component of time series refers to erratic time series movements that follow no recognizable or regular pattern.
(a) Trend      (b) Seasonal      (c) Cyclical      (d) Irregular