TABLE 16-4
Given below are EXCEL outputs for various estimated autoregressive models for a company's real operating revenues (in billions of dollars) from 1985 to 2008. From the data, we also know that the real operating revenues for 2006, 2007, and 2008 are 11.7909, 11.7757 and 11.5537, respectively.
AR(1) Model:
AR(2) Model:
AR(3) Model:

-Referring to Table 16-4, if one decides to use AR(3), what will the predicted real operating revenue for the company be in 2011?
A) $11.59 billion
B) $11.68 billion
C) $11.84 billion
D) $12.47 billion

Question

TABLE 16-4
Given below are EXCEL outputs for various estimated autoregressive models for a company's real operating revenues (in billions of dollars) from 1985 to 2008. From the data, we also know that the real operating revenues for 2006, 2007, and 2008 are 11.7909, 11.7757 and 11.5537, respectively.
AR(1) Model:
  AR(2) Model:
  AR(3) Model:
 
-Referring to Table 16-4, if one decides to use AR(3), what will the predicted real operating revenue for the company be in 2011?
A) $11.59 billion 
B) $11.68 billion 
C) $11.84 billion 
D) $12.47 billion

Quizplus · Accepted Answer

The AR(3) model uses the past three observations to predict the next value. Based on the data and calculations provided in Table 16-4, the predicted real operating revenue for 2011 using the AR(3) model is $11.84 billion.

TABLE 16-4 Given Below Are EXCEL Outputs for Various Estimated Autoregressive Models