Business Forecasting Using eViews Essay Example | Topics and Well Written Essays - 1500 words

Business Forecasting Using eViews - Essay Example 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 in 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. A histogram illustrates a slightly clearer representation of the data, this helps with the noise problem. Due to the non-linearity and volatility of financial data, it is difficult to predict the level of the series at each period. 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. There is a slight increase in the middle of the graph between mid-2002 and mid-2003. The first difference of the logarithms is the returns to share in the financial market. This is the representation of the value. The change or the first difference of Y is c. If the accurate prediction of the consequent references were possible from the series, then the next period would be an increment to the current level to achieve the next level. Reiterations for all higher levels takes place. The constant model expansion yields Financial data are very volatile due to the many factors that affect its behavior. This makes it very unpredictable.