Explain, Briefly, Why the Larger the Number of Periods Included

question 61

Essay

Explain, briefly, why the larger the number of periods included in a moving average forecast, the less well the forecast identifies rapid changes in the variable of interest.

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Definitions:

Internal Rate of Return

The rate of discount at which the total net present value of a project or investment's cash inflows and outflows balances out to zero.

Conventional Cash Flows

Cash flow patterns characterized by an initial outflow (investment) followed by a series of positive cash inflows.

Analysis

This refers to the detailed examination and evaluation of data, facts, or financial figures to break down complex materials into smaller, understandable components, often for decision-making purposes.

Internal Rate of Return

A calculation used to estimate the profitability of potential investments, representing the discount rate at which the net present value of costs and benefits of a project are equal.