Help with a calculation

[hassan.mahfooz]

Please help me understand this calculation. My math and statistics is a bit rusty.
(ln Salest – ln Salest–1) = b0 + b1(ln Salest–1 – ln Salest–2) + b2(ln Salest–4 – ln Salest–5
If sales grew by 1 percent last quarter and by 2 percent four quarters ago, then the model predicts that sales growth this quarter will be 0.0121 – 0.0839 ln(1.01) + 0.6292 ln(1.02) = e0.02372 – 1 = 2.40%
Institute, CFA. 2016 CFA Level II Volume 1 Ethical and Professional Standards and Quantitative Methods. CFA Institute, 07/2015. VitalBook file.

 

[krokodilizm]

You know what to do

 

[data storm]

i guess you incorrectly missed the order.. ln 1.01 is 0.01 and ln 1.02 is 0.0198
consequently, 0.0121 - (0.0839) (0.01) + (0.0198)(0.6292)
the left side “before the summation” 0.0113
the right side “after the summation” 0.0125
hence, you got 0.0238, getting them to the exponent - 1 you get the value.

 

[hassan.mahfooz]

What is that supposed to mean/

 

[hassan.mahfooz]

I want to know why 1% growth is being converted in Ln 1.01

 

[data storm]

because this is a time series that exhibits a constant rate of growth.

 

[Flashback]

krokodilizm wrote:
You know what to do

You meant this manner…

 

[krokodilizm]

hassan.mahfooz wrote:
What is that supposed to mean/

Imagine that formula is the ball.

 

[Flashback]

Don’t listen him, rather imagine that formula is the dog.