Quant: Sales Growth

Alexis Popov, CFA, wants to estimate how sales have grown from one quarter to the next on average. The most direct way for Popov to estimate this would be: A) an MA(1) model. B) an AR(1) model. C) a linear trend model. D) an AR(1) model with a seasonal lag.


100% C. I had tripped on this one initially. But not again now!

Yep C)

someone care to explain?!!

I thought it was B) How is it C?

It’s C. I sincerely hope I get this all right, but here’s why: A is wrong because you are not tracking a moving average. B is wrong because you are not regressing the independent variable against itself. D is wrong because the question is specified as ‘one quarter to the next’ and not one quarter to the following year’s quarter.

Zim says: Sales growth = trend