New Click here to Enroll in NaBFID Analyst Intro Class on May 6

    Question

    Which of the following best describes the seasonal

    component in time series data?
    A The long-term trend in the data that shows overall movement in a certain direction over time. Correct Answer Incorrect Answer
    B Random fluctuations in data that cannot be explained by the trend or seasonal effects. Correct Answer Incorrect Answer
    C Regular patterns or cycles in data that repeat over a specific time period, such as monthly or yearly. Correct Answer Incorrect Answer
    D The difference between actual values and predicted values in time series analysis. Correct Answer Incorrect Answer
    E The fluctuations in data caused by external factors such as policy changes or natural disasters. Correct Answer Incorrect Answer

    Solution

    The seasonal component in time series refers to regular, repeating patterns that occur at specific intervals, such as daily, monthly, or yearly. It typically represents fluctuations in the data that are predictable and tied to time periods, like increased sales during the holiday season or higher electricity demand during summer months. The seasonal component is often caused by factors such as weather, holidays, and societal behaviors, and it repeats at fixed intervals. Understanding this component helps analysts make better predictions for future data points by adjusting for these known fluctuations. Option A is incorrect because the trend component refers to the long-term movement in data, not the repeating patterns at specific intervals. Option B is incorrect because residuals (or noise) are the random, unexplained fluctuations in data, not the predictable seasonal patterns. Option D is incorrect as it refers to residuals, which are the difference between observed values and those predicted by a model, and not a time series component. Option E describes irregular components (or residuals), which are caused by external, unpredictable factors and not by seasonal cycles.

    Practice Next