0
$\begingroup$

I have a query regarding part (a) of the following question. I cannot figure out how to calculate the conditional expected value of collections for the month of Easter. Is it not possible to calculate the expected value for (a) with the given information, as no dataset is given with the question, is it possible to calculate the expected value for (a) without any data / only using the info provided below? If so could somebody point me in the right direction of how this would be done?

Any assistance or direction would be much appreciated.

4. Suppose you were recently hired to be the controller for a religious order. Since your duties include managing short-term cash flows, you need a forecast of the timing and magnitude of offerings. You expect Easter Sunday will be an event in which attendance and general offerings are expected to be above normal.

To estimate the Easter Sunday effect on order cash flows, you estimate the following regression model using ordinary least squares:

   COLLt  = b0 + b1 TIME + b2 DEaster + et

   Where:
           COLLt  = Monthly collections donated for general budget;
           Time = Time index;
           DEaster = Dummy variable equal to 1 for the month in which Easter occurs 
                     and zero otherwise.

(a) What is the conditional expected value of collections for the month in which Easter occurs?
(b) Your expectations are that collections will be above normal for the month in which Easter occurs. Describe how you would test for this effect. Be specific in your description of testing procedures.

Therefore would (a) be something like: $E(X|Y=y) Coll_{t} = B_{0} + B_{2}(1) + E_{t} X = B_{0} + B_{2}(1) + E_{t}$

or would you keep the B1 slope & time index also so answer is: $X = B_{0} + B_{1} Time + B_{2}(1) + E_{t}$

Also in regards to part (b) the only way i can think of testing this is by comparing each month against easter to determine if the collections were above normal or comparing average collections from every month but easter against the easter collections. Any assistance with this would be great, stats is so difficult.

$\endgroup$
1
$\begingroup$

is it possible to calculate the expected value for (a) without any data / only using the info provided below

On the information given, I believe the intent with this question is not numerical but algebraic/descriptive. That is, you could answer the question symbolically in terms of the correct combination of model coefficients.

$\endgroup$

Your Answer

By clicking “Post Your Answer”, you agree to our terms of service, privacy policy and cookie policy

Not the answer you're looking for? Browse other questions tagged or ask your own question.