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CFA Level 2
Quantitative Methods

Analysis of Seasonal Indices for Winter Jacket Sales

Hard Time-series Analysis Seasonality

A data analyst at a commodities firm is evaluating the month-to-month sales data of a seasonal product, a winter jacket, over a five-year period. The analyst suspects that the monthly sales data exhibit seasonal patterns. To analyze the seasonality, the analyst identifies the following sales figures for the five years:

January: 120, February: 150, March: 230, April: 180, May: 100, June: 60, July: 30, August: 40, September: 70, October: 110, November: 270, December: 300.

The analyst proceeds to calculate the seasonal indices for each month as a ratio of actual sales to average monthly sales across the entire period. Which of the following statements regarding the seasonal indices derived from the analysis is true?

Hint

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