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CFA Level 2
Quantitative Methods

Projecting Revenue Using Linear Trend Model

Very Hard Time-series Analysis Trend Models

A financial analyst is tasked with predicting future sales revenue for a product using a time-series dataset that spans 24 months. The analyst decides to implement a linear trend model to project future revenues. The dataset shows a consistent upward trend with a linear relationship. The analyst fits the model and derives the following regression equation:

Revenue (R) = 2500 + 150 * Month

Based on this model, the analyst forecasts the revenue for the 25th month. Which of the following options correctly represents the projected revenue for month 25?

Hint

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% Correct73%