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Allie White, the chief loan officer for the Dominion Bank, would like to analyze the bank's loan portfolio for the year 2001 to 2006. The
Allie White, the chief loan officer for the Dominion Bank, would like to analyze the bank's loan portfolio for the year 2001 to 2006. The data are shown in Table P-17. Use a computer program to plot the data and compute the autocorrelations for the first six time lags. Is this time series stationary? Compute the first differences of the series, Use a computer program to plot the differenced data and compute the autocorrelations for the differenced data for the six time lags, is this time series stationary? Analyze the autocorrelation coefficients for the series shown in Figures 3-18 through 3-21. Briefly describe each series. Table P-23 contains Southwest Airlines' quarterly income ($MM) for the years 1988-1999. Plot the income data as a time series and describe any patterns that exist. Is this series stationary or nonstationary ? Explain Using a computer program, compute the autocorrelations of the income series for the first 10 time lags. Is the behavior of the autocorrelations consistent with your choice in part b? Explain. Use a computer program to compute the fourth differences of the income data. Fourth differences are computed by differencing observations four time periods apart. With quarterly data, this procedure is sometimes useful for creating a stationary series from a nonstationary series. Consequently, the fourth differenced data will be Y_5 - Y_1 = 19.64 -.17 = 19.47, y_6 - y_2 = 19.24 - 15.13 = 4.11, and so forth. Plot the time series of fourth differences. Does this time series appear to be Stationary or nonstationary? Explain
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