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Business Forecasting Using eViews - Essay Example
Logic & Programming
Pages 6 (1506 words)
Course: Year: Subject: Business Forecasting Using eViews Student: Tutor: Introduction The use of eViews is an essential tool in the forecasting and analysis of econometric data. The presentation of data is in the form of graphs and models. These graphs and models relay a lot of information on the business under analysis…
The company had a major crisis in the last quarter of 2002 until mid-2003. Some of their equipment failed in the market and they faced a multi-million pound lawsuit. This led to a huge deficit in their pension fund. This was the cause of the major fall of their share prices in that period. From the analysis, the prices were performing better from that point onward and rose in an almost steady gradient. This was until the first quarter of 2005 when the share price fell slightly, then another steady rise to mid-2006. Subsequently, there was a drop of the index by about 50. The graph then rises and a number of more falls follow before the end of the sample period. Due to the noise of the graph, trend identification is difficult (Brooks 2002). A histogram illustrates a slightly clearer representation of the data, this helps with the noise problem. Returns Due to the non-linearity and volatility of financial data, it is difficult to predict the level of the series at each period (Mills 1999). The figure below is stationary, which makes it more predictable. It also depicts the first differences in the series. It shows the first differences of the Rolls Royce shares during the period 01/01/2000 and ending 31/12/2007. The differences in this period are stationary relative to their mean; their variance is relatively stable as well. ...
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