STATISTICS FOR MANAGERS

Answers, Ch. 16

16.17

b. DJIA_t = -976.77 + 458.19 t

r² =0.883, r²_adj = 0.878, F-statistic = 188.78

.

c.  DJIA_t = 398.95 + 128.02 t + 12.70 t²

r² =0.916, r²_adj = 0.909, F-statistic = 130.59

.

d.  ln DJIA_t = 6.70 + 0.11 t

r² =0.965, r²_adj = 0.964, F-statistic = 692.62

.

e.  The exponential trend model has the highest r² and r²_adj , as well as the highest F-statistic, so it is the best model

.

f.  2006 => t = 27

Linear trend model:  DJIA₂₇ = -976.77 + 458.19 (27) = 11394.41

Quadratic trend model:  DJIA₂₇ = 398.95 + 128.02 (27) + 12.70 (27)² = 13113.01

Exponential trend model:  ln DJIA₂₇ = 6.70 + 0.11 (27) = 9.73 => DJIA₂₅ = e^9.73 = exp (9.73) = 16821.88