Use of a Smoothing Constant Value Greater Than 0

question 71

Multiple Choice

Use of a smoothing constant value greater than 0.5 in an exponential smoothing model gives more weight to ___________.

• A)the actual value for the current period
• B)the actual value for the previous period
• C)the forecast for the current period
• D)the forecast for the previous period
• E)the forecast for the next period

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Definitions:

Capital Structure

The composition of a company's liabilities and equity, defining how it finances its overall operations and growth.

M&M Proposition I

A principle of corporate finance stating that the value of a firm is unaffected by how it is financed, in the absence of taxes, bankruptcy costs, and asymmetric information.

Interest Tax Shield

The reduction in income taxes that results from taking allowable deductions for interest expenses.

Capital Structure

The mix of different forms of external financing used by a company, including debt, equity, and hybrid securities.