Forecasting

Question 1
Shown below are rental and leasing revenue figures for office machinery and
equipment in the United States over a 7-year period according to the U.S. Census
Bureau. Use this data and the regression tool in the Data Analysis ToolPak to run a
linear regression.
Based on the formula you get from the regression output, answer the following
questions:
a. What is the forecast for the rental and leasing revenue for the year 2011?
b. How confident are you in this forecast? Explain your answer by citing the relevant
metrics.
Year Rental and
Leasing
($
millions)
2004 5,860
2005 6,632
2006 6,543
2007 5,952
2008 5,732
2009 5,423
2010 4,589
Question 2
Suppose a researcher gathered survey data from 19 employees and asked the
employees to rate their job satisfaction on a scale from 0 to 100 (with 100 being
perfectly satisfied). Suppose the following data represent the results of this survey.
Assume that relationship with their supervisor is rated on a scale from 0 to 50 (0
represents a poor relationship and 50 represents an excellent relationship); overall
quality of the work environment is rated on a scale from 0 to 100 (0 represents poor
work environment and 100 represents an excellent work environment); and
opportunities for advancement is rated on a scale from 0 to 100 (0 represents no
opportunities and 100 represents excellent opportunities).
Answer the following questions:
a. What is the regression formula based on the results from your regression?
b. How reliable do you think the estimates will be based on this formula? Explain your
answer by citing the relevant metrics.
c. Are there any variables that do not appear to be good predictors of job satisfaction?
How can you tell?
d. If a new employee reports that her relationship with her supervisor is 40, rates her
opportunities for advancement to be at 30, finds the quality of the work environment
to be at 75, and works 60 hours per week, what would you expect her job satisfaction
score to be?
Job
satisfaction
Relationship
with
supervisor
Opportunities
for
advancement
Overall
quality of
work
environment
Total
hours
worked
per
week
55 27 42 50 52
20 35 28 60 60
85 40 7 45 42
65 35 48 65 53
45 29 32 40 58
70 42 41 50 48
35 22 18 75 55
60 34 32 40 50
95 40 48 45 40
65 33 11 60 38
85 38 33 55 47
10 5 21 50 62
75 37 42 45 43
80 37 46 40 42
50 31 48 60 46
90 42 30 55 38
75 36 39 70 43
45 20 22 40 42
65 32 12 55 53
Question 3
Investment analysts generally believe the interest rate on bonds is related to the
prime interest rate for loans.
a. Use the following data to construct a scatter graph and then fit a regression line to the
data. Report the regression formula and the r-squared values from the chart (right
click on the data points, select Add Trendline, and select options to show these
metrics).
b. Do you think the bond rate can be predicted by the prime interest rate? Justify your
answer using the relevant metrics.
Prime interest
rate
Bond
rate
5.0% 28.0%
12.0% 48.0%
9.0% 32.0%
1.5%