Consider the Following Single Exponential Smoothing Model: S_t = $\alpha$ X_t + (1-

question 30

Multiple Choice

Consider the following single exponential smoothing model: S_t = $\alpha$ X_t + (1- $\alpha$ ) S_t-1
You are given the following data:
=0) 1, X_t=0.5,S_t-1=0.2 If we believe that the true DGP can be approximated by the exponential smoothing model, what would be an appropriate 2-step ahead forecast for X? (i.e. a forecast of X_t+2 made at time t)

• A) 0.2
• B) 0.23
• C) 0.5
• D) There is insufficient information given in the question to form more than a one step ahead forecast.

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Definitions:

Multicollinearity

A statistical phenomenon in which two or more predictor variables in a multiple regression model are highly correlated, potentially distorting the results.

Standard Errors

Measures that provide an estimation of the sampling variation, usually referring to the standard deviation of the sample mean's distribution or other parameter estimates.

Slope Coefficients

In linear regression, these coefficients represent the degree of change in the dependent variable for a one-unit change in an independent variable.

Predictor Variables

Variables that are used in statistical models to predict outcomes or responses of another variable.