Answer to Question #80251 in Statistics and Probability for Araf

Question

Suppose you would like to model various financial processes and are trying to determine the appropriate mathematical functions to use. Please name and write down the general form of the equation for the most appropriate mathematical function in each of these situations.
(a) A time series process where the dependent variable changes by a constant absolute amount each period.
(b) A time series process where the dependent variable changes by a constant percentage amount each period.
(c) A situation where there is a constant elasticity relationship between the dependent and independent variables.
(d) For your answers in parts (b) and (c), write down the general forms of these functions using logarithms.

Answer 1

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