Xander Feng, CFA, is a quantitative analyst with Red Star Securities Ltd., a com
ID: 3370930 • Letter: X
Question
Xander Feng, CFA, is a quantitative analyst with Red Star Securities Ltd., a company based in Shanghai, China. Red Star provides stock brokering and investment advisory services to institutional investors. Extending its regular business, the firm also maintains equity and fixed income investment research teams. Feng is forecasting quarterly sales of Xiomi Inc, a smart phone manufacturer based in China. The regression model is: The regression results for the smartphone sales model are presented in the exhibits below: Exhibit 1: Regression statistics for smartphone sales model R-squared 0.7436 Observations 120 Coefficient Standard Error Intercept 313.24 99.43 1 0.67 0.16 Exhibit 2: Autocorrelation of Residuals for smartphone sales model Lag Autocorrelation 10.083 2 0.092 3 0.075 5 0.068 6 0.125 "The critical values, assuming 5% significance level and 118 degrees of reedom are 1.980 or a two-tail t test and 1.658 or a one-tail t-test. Has the smartphone sales model correctly specified a time series model for sales at p 0.05? AYes BNo, lag 4 should be added to the model CNo, lag 6 should be added to the modelExplanation / Answer
Answer
Option (A) is correct which means that Smatphone sakes model correctly specified a time series model for sales at p=0.05
So Yes
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