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when should linear regression not be used to predict quarterly sales?
1. when there is seasonal variation in sales
2. when there is compound growth in sales
3. when there is large amount of data
4. when there is little variability in quarter salesi figured the answer to be when there is large amount of data but i am confused should it be 3 option or 4 when there is little variability because regression also helps find the variablity.
Why are you attempting a question for which you do not have an answer? You should be using a Revision Kit from one of the ACCA Approved Publishers – they have answers and explanations.
3 is not a correct answer – the more data the more ‘accurate’ regression analysis will be.
4 is not a correct answer. If there is seasonality then time series analysis is more sensible. If there is no seasonality then regression analysis is fine.
1 is half correct in that time series analysis is needed (maybe together with linear regression).
2 is the answer because linear regression is only valid when the relationship is essentially linear. If there is compound growth then the relationship is not linear.Have you watched my free lectures on regression and on time series analysis? The lectures are a complete free course for Paper MA and cover everything needed to be able to pass the exam well.
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