A model with lagged revenues.In time series it is often useful to use one or more lagged variables(corresponding to past periods) as independent variables.In this part of the assignment,you will build asimple linear regression model in which the quarterly revenue is lagged by four periods is the independentvariable.Thefour-periodlagistomatchthequarterlystructureofthedataset.

• Lagged revenue model:The model is a simple linear regression with quarterly revenue (variableQR)asthedependentvariable,andquarterlyrevenuefromfourperiodsprior(variableLag4QR)astheonly independent variable.Note here that the variable Lag4QRis not in the dataset and needs to becreated.

Tocreatethenewvariable,followthefollowingsteps:

• IncellJ1typethenewvariablenameLag4QR.
• CopythequarterlyrevenuetimeseriesandpasteitincellJ6.Inthisway,thevalueofLag4QRfor period 5 is the same as the value ofQRfor period 1, the value of Lag4QRfor period 6 is thesameasthevalueofQRforperiod2,andsoon.
• AnotherwaytoobtainthesameistogoincellJ6,typetheExcelformula=G2,andpressenter.YoucanthendoubleclickonthebottomrightcornerofcellJ6tocopyandpastetheformulatoallremainingperiods.
• Note.ThecellsJ2throughJ5mustremainblank.

1. Amazon quarterlyrevenue(1point)

Considerthelaggedrevenuemodel(dependentvariable: QR,independentvariable: Lag4QR),anduseitto forecast Amazon's quarterly revenues for the fourth quarter of 2021. What is the forecast estimate inmillionofUSdollars?

2. Amazon quarterlyrevenue(1point)

Consider the lagged revenue model (dependent variable:QR, independent variable:Lag4QR), and use ittoforecastAmazon'squarterlyrevenuesforthefourthquarterof2021.Whatisthedifferencebetweentheupperandthelowerendsofthe95%intervalforthisforecastinmillionofUSdollars?

3. Amazon quarterlyrevenue(1point)

Considerthelaggedrevenuemodel(dependentvariable: QR,independentvariable: Lag4QR),anduseittoforecastAmazon'squarterlyrevenuesforthefourthquarterof2021.HowconfidentcanyoubethattheAmazonrevenuesinthefourthquarterof2021willbeatleast$140,000.000million?