21 Clients at a large brokerage company are primarily concer

21. Clients at a large brokerage company are primarily concerned about selling their stocks just

before a major downward correction occurs in the market. The brokerage company should

therefore choose a model that

a. forecasts turning points best

b. has the best fit for the estimation period

c. results in minimum RMSE

d. results in minimum MAE

e. results in the minimum forecast bias

22. A marketing director knows that she will lose her job if she occasionally makes large

forecast errors regardless of the quality of her forecasts the rest of the time. The director

should therefore choose a model that

a. forecasts turning points best

b. has the best fit for the estimation period

c. results in minimum RMSE

d. results in minimum MAE

e. results in minimum forecast bias

23. In simple regression models, the F-test and the t-test

a. test statistically equivalent hypotheses

b. yield the identical p-values for each test

c. result in an F-ratio equal to the t-ratio

d. all of these

e. a and b only

24. The alternative hypothesis for the F-test on the multiple regression model

Y = ß0 + ß1X1 + ß2X2 +

can be stated as follows:

a. HA: either ß1 0 or ß2 0 or both

b. HA: either ß1 = 0 or ß2 = 0 but not both

c. HA: both ß1 > 0 and ß2 > 0

d. HA: ß1 = ß2 = 0

e. HA: ß1 = ß2 > 0

Solution

21) b. has the best fit for the estimation period

22) b. has the best fit for the estimation period

23)a. test statistically equivalent hypotheses

24) a. HA: either ß1 0 or ß2 0 or both