Question #91
Reading: Reading 2 Time-Series Analysis
PDF File: Reading 2 Time-Series Analysis.pdf
Page: 43
Status: Unattempted
Question
Consider the estimated model xt = −6.0 + 1.1 xt − 1 + 0.3 xt − 2 + εt that is estimated over 50 periods. The value of the time series for the 49th observation is 20 and the value of the time series for the 50th observation is 22. What is the forecast for the 52nd observation?
Answer Choices:
A. 42
B. 24.2
C. 27.22
Explanation
Using the chain-rule of forecasting,
Forecasted x51 = −6.0 + 1.1(22) + 0.3(20) = 24.2.
Forecasted x52 = −6.0 + 1.1(24.2) + 0.3(22) = 27.22.