If a Series, Y_t, Follows a Random Walk (With No

question 16

Multiple Choice

If a series, y_t, follows a random walk (with no drift) , what is the optimal 1-step ahead forecast for y?

• A) The current value of y.
• B) Zero.
• C) The historical unweighted average of y.
• D) An exponentially weighted average of previous values of y.

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Definitions:

Automotive Parts

Components and systems that are used in the manufacturing and maintenance of vehicles, including cars, trucks, and motorcycles.

Costing System

A method used by businesses to estimate the cost of their products for profitability analysis, cost control, and inventory valuation.

Weighted Average Method

A costing method that calculates the cost of inventory based on the weighted average of the cost of items available for sale, used in accounting.

FIFO Method

"First In, First Out," an inventory valuation method where the oldest inventory items are sold first.