Which of the following is true about the trend components in the multiplicative

Question

Which of the following is true about the trend components in the multiplicative time series model:

A. In the multiplicative time series model, the trend component is first found by using regression. Then the seasonal component (index) is identified using the data. These two components are then multiplied to get the final forecast.

OR

B. In the multiplicative time series model, the trend component is first found by using the overall average. Then the seasonal component (index) is identified using the data. These two components are then multiplied to get the final forecast.

Explanation / Answer

The below statement is TRUE for trend components in the multiplicative time series model,

In the multiplicative time series model, the trend component is first found by using the Regression. Then the seasonal component (index) is identified using the data. These two components are then multiplied to get the final forecast.

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