Dear Sir,
There is one paragraph in the answers of Question 2 that I could not understand:
Using a ‘best guess’ approach, a trend value of 149 might be hypothesised for quarter 1 of 2013, giving a predicted value of 134·3 (149 – 14·7), just below the actual recorded value of 137. Predicted values would also be calculated for subsequent quarters. For example,
based on a (hand drawn) trend value of 151, the predicted value for quarter 3 of 2013 would be 173·55 (151 + 22·55), which subjectively seems much more realistic than the 152·55 suggested by the least squares analysis.
Could you provide a more detailed explaination what basis for the statement of "based on a (hand drawn) trend value of 151". I could not firgue out why they choose 151.
Thanks in advance.
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P3 Exam December 2013 - Question 2
There is nothing special about 151. A hand drawn trend will be approximate. Something around 150 is as good as it gets.
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