If the Span of a Moving Average Is Large -

question 4

True/False

If the span of a moving average is large - say,12 months - then few observations go into each average,and extreme values have relatively large effect on the forecasts.

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Definitions:

Expected Returns

The anticipated amount of profit or loss an investment is projected to generate.

Risk Aversion

A preference for lower-risk options over higher-risk ones, often seen in the behavior of investors seeking safer investments.

Security Market Line

A line that represents the relationship between the risk of an investment and its expected return, helping investors to assess the risk-return ratio.

Slope

The measure of the steepness, incline, or grade of a line, often representing the rate of change in a mathematical context.