When Is the Exponential Smoothing Model Equivalent to the Naïve

question 14

Multiple Choice

When is the exponential smoothing model equivalent to the naïve forecasting model?

• A)α = 0
• B)α = 0.5
• C)α = 1
• D)during the first period in which it is used
• E)never

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Definitions:

Accounting Basis

The method used to record financial transactions; common methods include cash basis and accrual basis accounting.

Scenario Analysis

A method of evaluating potential future scenarios by contemplating various possible results, often used for strategic planning purposes.

Simulation Analysis

A statistical method that involves running multiple scenarios of a model in order to estimate the probability of different outcomes.

Sensitivity Analysis

A financial modeling tool used to evaluate how different values of an independent variable affect a particular dependent variable under a given set of assumptions.