You are to become a statistical analyst for Berkshire Hathaway, and as such you have been given a number of articles, some with data, and some with strategies, to conduct your very own analysis.
Forecast and Combined Analysis and Implementation:
Use the following two forecast equations to begin your analysis:
Equation 1. Here is the simple simulative GDP forecast formula you can use. This simulation suggests that what has happened or could happen in railroad revenues is also happening in the overall economy. Therefore, this model can become a proxy for the economy without needing to go out into the economy using GDP totals which may at times be difficult to obtain.
Y = bo + b1X1 + E
Y = GDP
X1 = Railroad Revenues
Forecast GDP by using at least two different series for railroad revenues substituting them into X1.
Summarize the results of using different series of railroad revenues to predict GDP.
You may utilize these four sources for railroad information (you may also add some of your own sources):
• Reed, D. (2010, March 25). Warren Buffet sees strong rail system as key to U.S. growth (Links to an external site.)Links to an external site.. USA Today. Retrieved from http://usatoday30.usatoday.com/money/companies/management/2010-03-25-buffett23_CV_N.htm
• Surface Transportation Board. (n.d.). Railroad revenue deflator factors (Links to an external site.)Links to an external site.. Retrieved from http://www.stb.dot.gov/Econdata.nsf/M%20Railroad%20Revenue%20Deflator%20Factors?OpenPage
• Taschler, J. (2009, March 13). Railroad carload freight declines, reflecting economic slump (Links to an external site.)Links to an external site.. Journal Sentinel. Retrieved from http://www.jsonline.com/business/41217287.html
• Zacks Equity Research. (2011, February 2). Railroad industry outlook – Feb. 2011 (Links to an external site.)Links to an external site.. Retrieved from http://www.zacks.com/stock/news/46995/Railroad+Industry+Outlook+-+Feb.+2011
Equation 2. Use the following formula to examine how both freight and passenger loads affect railroad industry profits. This model assesses both freight and passenger profits, helping the railroad companies determine what products or services might be productive or might need to be dropped:
Using the formula P = Bo + b1X1 + b2X2 + E
P = Profits
X1 = Revenues – Costs (Freight)
X2 = Revenues – Costs (Passengers)
Using this multiple regression formula and the information you have, determine which variable would have the largest effect on railroad profits.
Evaluate the sign and size of b1 and b2.
You may utilize these three recommended sources for railroad information (you may also add some of your own sources):
• Carey, N. (2009, January 21). BNSF profit up despite carload drop of 7 percent (Links to an external site.)Links to an external site.. Reuters U.S. edition online. Retrieved from http://www.reuters.com/article/2009/01/22/us-bnsf-idUSTRE50K6PP20090122
• Roberts, R. (1991, March). Amtrak’s pursuit of profits. Railway Age, 192(3), 48. Retrieved from http://www.railwayage.com/
• Zacks Equity Research. (2010, October 1). U.S. railroad industry outlook – Oct. 2010 (Links to an external site.)Links to an external site.. Retrieved from http://www.zacks.com/stock/news/40950/U.S.+Railroad+Industry+Outlook+-+Oct.+2010
Once you complete your study, you are to present your findings to Mr. Buffet. Include what you believe to be the most pertinent information that Mr. Buffet may need to make an educated forecast for future investments according to the economic health of the nation.
Research:
Your paper must reference at least five outside resources.
• Must begin with an introductory paragraph that has a succinct thesis statement.
• Must address the topic of the paper with critical thought.
• Must end with a conclusion that reaffirms your thesis.
• Must use at least five scholarly sources in addition to the course text.
BUS669.W6A1.11.2014
Description:
Total Possible Score: 23.00
Forecasts GDP By Using at Least Two Different Series of Railroad Revenues By Substituting Them Into X1
Total: 5.00
Distinguished – Correctly forecasted GDP by using at least two different series of railroad revenues by substituting them into X1.
Proficient – Created forecasts of GDP using at least two different series of railroad revenues and substituting them into X1 with minor errors or omissions.
Basic – Created forecasts of GDP using at least two different series of railroad revenues by substituting them into X1 with relevant errors and/or omissions.
Below Expectations – Attempts to forecast GDP using at least two different series of railroad revenues by substituting them into X1s with significant errors and omissions.
Non-Performance – The forecasts of GDP using at least two different series of railroad revenues are either nonexistent or lack the components described in the assignment instructions.
Summarizes the Results of Using Different Series of Railroad Revenues to Predict GDP
Total: 5.00
Distinguished – Correctly summarizes the results of using different series of railroad revenues to predict GDP.
Proficient – Summarizes the results of using different series of railroad revenues to predict GDP with minor errors or omissions.
Basic – Summarizes the results of using different series of railroad revenues to predict GDP with relevant errors and/or omissions.
Below Expectations – Summarizes the results of using different series of railroad revenues to predict GDP with significant errors and omissions.
Non-Performance – The summary of the results of using different series of railroad revenues to predict GDP is either nonexistent or lacks the components described in the assignment instructions.
Uses the Multiple Regression Formula to Determine Which Variables Would Have the Largest Effect on Railroad Profits
Total: 5.00
Distinguished – Correctly uses the multiple regression formula to determine which variables would have the largest effect on railroad profits.
Proficient – Uses the multiple regression formula to determine which variables would have the largest effect on railroad profits with minor errors or omissions.
Basic – Uses the multiple regression formula to determine which variables would have the largest effect on railroad profits with relevant errors and/or omissions.
Below Expectations – Uses the multiple regression formula to determine which variables would have the largest effect on railroad profits with significant errors and omissions.
Non-Performance – The use of the multiple regression formula to determine which variables would have the largest effect on railroad profits is either nonexistent or lacks the components described in the assignment instructions.
Evaluates the Sign and Size of b1 and b2
Total: 6.00
Distinguished – Correctly evaluates the sign and size of b1 and b2.
Proficient – Evaluates the sign and size of b1 and b2 with minor errors.
Basic – Evaluates the sign and size of b1 and b2 with relevant errors.
Below Expectations – Evaluates the sign and size of b1 and b2 with significant errors.
Non-Performance – The evaluation of the sign and size of b1 and b2 is either nonexistent or lacks the components described in the assignment instructions.
Written Communication: Control of Syntax and Mechanics
Total: 0.50
Distinguished – Displays meticulous comprehension and organization of syntax and mechanics, such as spelling and grammar. Written work contains no errors and is very easy to understand.
Proficient – Displays comprehension and organization of syntax and mechanics, such as spelling and grammar. Written work contains only a few minor errors and is mostly easy to understand.
Basic – Displays basic comprehension of syntax and mechanics, such as spelling and grammar. Written work contains a few errors which may slightly distract the reader.
Below Expectations – Fails to display basic comprehension of syntax or mechanics, such as spelling and grammar. Written work contains major errors which distract the reader.
Non-Performance – The assignment is either nonexistent or lacks the components described in the instructions.
Written Communication: APA Formatting
Total: 0.50
Distinguished – Accurately uses APA formatting consistently throughout the paper, title page, and reference page.
Proficient – Exhibits APA formatting throughout the paper. However, layout contains a few minor errors.
Basic – Exhibits limited knowledge of APA formatting throughout the paper. However, layout does not meet all APA requirements.
Below Expectations – Fails to exhibit basic knowledge of APA formatting. There are frequent errors, making the layout difficult to distinguish as APA.
Non-Performance – The assignment is either nonexistent or lacks the components described in the instructions.
Written Communication: Page Requirement
Total: 0.50
Distinguished – The length of the paper is equivalent to the required number of correctly formatted pages.
Proficient – The length of the paper is nearly equivalent to the required number of correctly formatted pages.
Basic – The length of the paper is equivalent to at least three quarters of the required number of correctly formatted pages.
Below Expectations – The length of the paper is equivalent to at least one half of the required number of correctly formatted pages.
Non-Performance – The assignment is either nonexistent or lacks the components described in the instructions.
Written Communication: Resource Requirement
Total: 0.50
Distinguished – Uses more than the required number of scholarly sources, providing compelling evidence to support ideas. All sources on the reference page are used and cited correctly within the body of the assignment.
Proficient – Uses the required number of scholarly sources to support ideas. All sources on the reference page are used and cited correctly within the body of the assignment.
Basic – Uses less than the required number of sources to support ideas. Some sources may not be scholarly. Most sources on the reference page are used within the body of the assignment. Citations may not be formatted correctly.
Below Expectations – Uses an inadequate number of sources that provide little or no support for ideas. Sources used may not be scholarly. Most sources on the reference page are not used within the body of the assignment. Citations are not formatted correctly.
Non-Performance – The assignment is either nonexistent or lacks the components described in the instructions.
• Must include a separate title page with the following:
o Title of project
o Student’s name
o Course name and number
o Instructor’s name
o Date submitted
• Must begin with an introductory paragraph that has a succinct thesis statement.
• Must address the topic of the paper with critical thought.
• Must end with a conclusion that reaffirms your thesis.
• Must use at least five scholarly sources in addition to the course text.
• Must document all sources in APA style as outlined in the Ashford Writing Center.
• Must include a separate references page that is formatted according to APA style as outlined in the Ashford Writing Center.