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In one of the questions in Quant Vignette - 86507, Where it gives R square using both linear and log linear for Very Vegan. The regression equation is for sales.
One of the questions in the vignette was
Based upon the output, which equation explains the cause for variation of very vegan’s sales over the sample period (Sample period sales go from 17 Million in 1Q to 100 Million in last quarter).
a) - Cause cannot be determined
b) Both simple linear trend and log linear trend have explanatory power
c) Simple trend is linear.
I went and checked with Rsquare is 0.9 and t-stat is significant and I concluded that both simple and log have explanatory power.
But the answer was A. To actually determine the explanatory power of sales itself, fitted values of the log linear trend needs to be determined and compared to the original data. The given information does not allow for comparison.
Please help. This is not making sense for me. |
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