Reference no: EM132140625

Question 1 - Private capital expenditure for 12 successive quarters are presented in the following table:

Quarter	Millions
1	31,920
2	25,120
3	30,350
4	24,650
5	30,090
6	23,980
7	28,450
8	26,710
9	31,380
10	27,260
11	34,380
12	34,800

Required

a) Please present the time series data with a line chart.
b) Please comment on the secular trend.

c) Does the line chart display a cyclical trend or a seasonal trend? Please explain.
Seasonal or cyclical:__________________

Explanation:_________________________

d) Use the line chart to predict the expenditure for Quarter 13.
Quarter 13 prediction:__________________

Justification:__________________________

Question 2

A farmer recorded rainfall (in mm) and average yield of crop (bushels / hectare) for 6 successive years as follows:

Year	Rainfall	Average Yield
1	350	240
2	180	100
3	150	90
4	400	280
5	580	60
6	140	80

Required

a) Is there a correlation between rainfall and average yield to suggest a linear relationship? Please explain the correlation, if it exists.

Yes / no:________________

Explanation:_____________

b) Draw a scatter plot and the least square line.

c) Is the least square line a good fit for the data? Please explain.
Yes / no:________________

Explanation:_____________

d) Re-draw the scatter plot and the least square line without Year 5 data.

e) Is the least square line in d) a good fit for the data? Please explain.
Yes / no:________________

Explanation:_____________

f) Please suggest a plausible reason why Year 5 had the highest rainfall and yet the lowest average yield.
Plausible reason:_________