HSH® Associates, financial publishers, is the nation’s largest publisher of mortgage and consumer loan information. Every week it collects current data from 2,000 mortgage lenders across the nation. It tracks a variety of adjustable rate mortgage (ARM) indexes and makes them available on its Web site. The file ARM contains the national monthly average one-year ARM for the time period January 2004 to December 2008.a. Produce a scatter plot of the federal ARM for the time period January 2004 to December 2008. Identify any time-series components that exist in the data.
b. Identify the recurrence period of the time series. Determine the seasonal index for each month within the recurrence period.
c. Fit a nonlinear trend model containing coded years and coded years squared as predictors for the deseasonalized data.
d. Provide a seasonally adjusted forecast using the nonlinear trend model for January 2009.
e. Diagnose the model.