Financial Econometrics and Decision Makers

Financial Econometrics
Name
Institutional Affiliation
Financial Econometrics
Decision-makers are expected to make decisions between alternative courses of action meaning that at some point they will have to integrate predictions of interesting variables. A couple of these variables applied in the prediction process are in the form of time series. In this regard, some will be economically signifying their interplay concerning time. One thing about time series and a major feature that characterizes them is that there is a dependency between adjacent observations. It is this feature that arouses considerable practical interest. The assumption in analyzing time series is that consecutive measurements apparent as successive values in the data file were taken at equal time intervals. Nevertheless, time-series seeks to serve two goals. First, it is to identify the nature of the phenomenon, which is a goal arrived at by a keener analysis on the sequence of observations. Secondly, it forecasts or else predicts future values.
Having underlined this important information, it is essential to state that there can be univariate or multivariate variables of interest. There is only a single factor influencing the former while multiple factors influence the latter. A single variable characterizes the univariate data implying that it alienates itself from causes or relationships. In this regard, estimates such as frequency distributions, whisker plot, dispersion, and central tendency depict its descriptive properties. On the flip side, the univariate data analysis is incapacitated when determining the relationship that exists between two or more variables. It cannot offer explanations, cause, comparisons, correlations as well as contingency between variables. Therefore, one will be less informed on th...