DSCI 5340: Predictive Modeling and Business Forecasting Spring 2013 – Dr. Nick Evangelopoulos Exam 1 review: Quizzes 1-6

POP QUIZ #1 1. The regression sum of squares (SSR) can never be greater than the total sum of squares (SST). TRUE FALSE √

POP QUIZ #1 2. The value of the t-test for testing b1 = 0 gives the same value as the t-test for testing that correlation r =0: TRUE FALSE √

POP QUIZ #1 3. How can a confidence interval for the true slope β1 be used to test if β1 is equal to 0? If the C.I. includes zero, β1 is not 0 If the C.I. does not include zero, β1 is probably 0 If the C.I. includes zero, β1 is probably 0 √

POP QUIZ #1 4. Does the residual plot shown below violate any of the model assumptions? No, the plot is symmetric No, the plot is random Yes, the plot is not bell-shaped Yes, the plot shows a non-random pattern √

POP QUIZ #1 For small data sets, an observation is called an outlier if its studentized residual is: Greater than 0 Greater than 2 Less than 0 Less than 2 √

POP QUIZ #2 1. The value of the test statistic to test if the slopes of the regression model for males and females are the same is : A: 3.04 B: 2.56 C: 0.82 D: -1.65

POP QUIZ #2 2. The regression equation for males (Gender=1) is : A: salary = 42235.42 + 1659.63EDUCAT -1034.14EXPER B: salaries = 42235.42 + 1659.63EDUCAT + 16.68EXPER C: salaries = 42235.42 + 625.49EDUCAT + 16.68EXPER

POP QUIZ #3 1. Cyclical variation: A. describes a gradual cyclical movement about the trend B. is generally attributable to business and economic conditions C. has its cycle length measured from one peak to the next D. All of the above

POP QUIZ #3 2. The model below is called: A. Additive Model B. Multiplicative Model C. Component Model D. None of the above

POP QUIZ #3 3. In the deseasonalized multiplicative model below, how can we isolate the cyclical activity? A. By dividing yt by the trend estimate yt-hat B. By dividing yt by the seasonal component St C. By dividing yt by the cyclical component Ct D. By dividing yt by the irregular component It

POP QUIZ #3 4. In the four-step procedure for Time Series Decomposition, what is the recommended first step? A. Determine the trend component B. Determine the irregular component C. Determine the seasonal indices D. Determine the forecasted values

POP QUIZ #3 5. In a Time Series Decomposition model, which components are the most useful in estimating future values? A. The cyclical and irregular components B. The seasonal, cyclical, and irregular components C. The trend and seasonal components D. The trend, cyclical, and irregular components

POP QUIZ #4 1. Exponential Smoothing is a forecasting method that is most effective when the trend and seasonal components of the time series are changing over time: A. TRUE B. FALSE

POP QUIZ #4 2. In Exponential Smoothing, recent and remote observations are weighted: A. Equally B. Unequally

POP QUIZ #4 3. Holt’s trend corrected exponential smoothing method applies to time series data that have A. A local linear trend that changes slowly B. A global linear trend that remains constant

POP QUIZ #5 1. Estimation in classical Box-Jenkins models is done using ordinary least squares (OLS): A. TRUE B. FALSE

POP QUIZ #5 2. Box-Jenkins models are seasonal: A. TRUE B. FALSE

POP QUIZ #5 3. Can classical Box-Jenkins models accommodate nonstationary time series data? A. Yes, because they can be transformed to stationary through differencing B. Yes, because they can be transformed to stationary through a log-transformation C. No, one should never use Box-Jenkins models when the data is nonstationary

POP QUIZ #5 4. ARIMA stands for: A. Autoregressive Integrated Mean Approximation B. Autoregressive Integrated Moving Average C. Autoregressive Indicators for Moving Average

POP QUIZ #5 5. Stationarity is defined as the property where: A. Statistical properties remain constant over time B. Statistical properties evolve slowly over time C. Statistical properties change fast over time

POP QUIZ #6 1. What happens to the mean and variance of an AR(1) model if the f1 coefficient is equal to 1? A. Mean and variance drift to zero B. Mean and variance drift to infinity C. The mean drifts to zero, the variance drifts to infinity D. The mean drifts to infinity, the variance drifts to zero √

POP QUIZ #6 2. What is the name of the function that identifies the order of an autoregressive B-J model? A. Polynomial function B. Autoregressive function C. Moving Average function D. Characteristic function √

POP QUIZ #6 3. Is the model yt = yt-1 + at stationary or nonstationary? Why? A. Nonstationary, because it has a unit root B. Stationary, because it has a unit root C. Nonstationary, because it does not have a unit root D. Stationary, because it does not have a unit root √

POP QUIZ #6 4. The “X” in ARIMAX stands for: A. Extra B. Previous C. Exogenous D. Exotic √

POP QUIZ #6 5. Based on the SCAN output below, a tentative ARIMA model seems to be: A. MA(0) B. AR(0) C. MA(1) D. AR(1) √