Question

In: Finance

The accompanying table gives the stock market indices for a certain company on the stock market....

The accompanying table gives the stock market indices for a certain company on the stock market. Use simple linear regression to forecast the data.

Date   Index   Date (numeric)
9/3/2010   10,446.78   40424
9/7/2010   10,340.24   40428
9/8/2010   10,387.43   40429
9/9/2010   10,416.96   40430
9/10/2010   10,462.14   40431
9/13/2010   10,545.67   40434
9/14/2010   10,525.62   40435
9/15/2010   10,572.66   40436
9/16/2010   10,593.78   40437
9/17/2010   10,606.94   40438
9/20/2010   10,752.82   40441
9/21/2010   10,760.77   40442
9/22/2010   10,740.59   40443
9/23/2010   10,663.99   40444
9/24/2010   10,861.13   40445
9/27/2010   10,812.19   40448
9/28/2010   10,858.73   40449
9/29/2010   10,833.32   40450
9/30/2010   10,788.48   40451
10/1/2010   10,828.31   40452

A. Identify the trend and level for the given data.

​(Round the Trend to two decimal places as needed. Round the Level to the nearest integer as​ needed.)

B. What would be the forecasts for the next three​ days?

Solutions

Expert Solution

After plotting the points in excel, we see a steady upward trend

We use the forecast function in excel, for which we first calculate the daily price changes in % terms and then extrapolate those values into the future

Our forecast
Stock price % Chg from previous day
9/3/2010 10446.78
9/7/2010 10340.24 -1%
9/8/2010 10387.43 0%
9/9/2010 10416.96 0%
9/10/2010 10462.14 0%
9/13/2010 10545.67 1%
9/14/2010 10525.62 0%
9/15/2010 10572.66 0%
9/16/2010 10593.78 0%
9/17/2010 10606.94 0%
9/20/2010 10752.82 1%
9/21/2010 10760.77 0%
9/22/2010 10740.59 0%
9/23/2010 10663.99 -1%
9/24/2010 10861.13 2%
9/27/2010 10812.19 0%
9/28/2010 10858.73 0%
9/29/2010 10833.32 0%
9/30/2010 10788.48 0%
10/1/2010 10828.31 0%
10/2/2010       10,944.82 1%
10/3/2010       11,061.66 1%
10/4/2010       11,232.09 2%

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