Multiplicative time series model
The seasonal effect is expressed as a factor rather than a fixed number of units. It can be useful when seasonal variation changes proportionally with the level of the series. Use the correct factor and ensure it matches the period; historical relationships may not persist.
Worked example
A quarterly trend forecast is 200 units and its seasonal factor is 1.15. The multiplicative forecast is 200 × 1.15 = 230 units.
Common mistake
Adding 1.15 units to the trend or confusing a 15% increase with a factor of 0.15.
Where it appears in your exams
| Qualification | Exam | Relationship | Period |
|---|---|---|---|
| ACCA | MA | Direct | September 2026–June 2027 |
| FIA | FMA | Direct | September 2026–June 2027 |
