Chapter 1 An Introduction to Accounting
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Feb 20, 2024
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Chapter 1 An Introduction to Accounting Kopert evans Question 1. Would you recommend removing the cyclical component from the model in Exhibit 7? Why or why not? | would not recommend removing the cyclical component (Lagged Permits) from the model in Exhibit 7, because doing so decreases the r-squared value of the validation set from -1.915 to -38.860. Therefore, removing the lagged permits variable makes the model a much worse fit for forecasting predicted values. Question 2. Would you dr ing the / t from the model in Exhibit 7?2 Why or why not? | would not recommend removing the seasonal component (Month) from the model in Exhibit 7, because doing so decreases the r-squared value of the validation set from -1.915 to -2.117. Therefore, removing the lagged permits variable makes the model an even worse fit for forecasting predicted values. Question 3. Would you recommend removing the trend component from the model in Exhibit 7?2 Why or why not? | would recommend removing the trend component (Time) from the model in Exhibit 7, because doing so increases the r-squared value of the validation set from -1.915 to -0.533. While this is still not a great fit based on the validation set r-squared value, it does move the validation r-squared value in the right direction. Therefore, removing the lagged permits variable makes the model a slightly better fit for forecasting predicted values Question 4. Which model, if any, should be used as the final model to produce the forecasts? | don’t believe that any of these models should be used to produce forecasts on the forecast horizon because none of the simplified models create a positive r-squared value for the validation set. Therefore, all models considered are still seriously overfit and are likely poor models for predicting values in the forecast horizon and have low forecasting accuracy. | Vasudha K (She/Her) é Wednesday
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