The Management of a Company Specializing in Securities Analysis Has

question 131

Multiple Choice

The management of a company specializing in securities analysis has been using two forecasting methods to follow a new stock issue. Forecast Method $$\begin{array} { | l | l | l | l | } \hline \text { Month } & \begin{array} { c } \text { Exponential } \\\text { Smoothing }\end{array} & \text { Judgmental } & \begin{array} { c } \text { Actual } \\\text { Price }\end{array} \\\hline 1 & 48 & 50 & 51 \\2 & 50 & 52 & 53 \\3 & 51 & 55 & 54 \\\hline\end{array}$$ Which one of the following statements is TRUE?

• A) Based on MAD, the judgmental method is more accurate.
• B) Based on CFE, the bias of the judgment forecasts is larger than the bias of the exponential smoothing forecasts.
• C) Based on MAD, the exponential smoothing approach is more accurate.
• D) Based on CFE, the bias of the exponential smoothing forecasts is steadily improving.

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Definitions:

Legal Documentation

Official documents that record agreements, contracts, rights, and obligations within legal proceedings and business transactions.

Penalized

Subject to punishment or sanctions due to violations of rules, laws, or regulations.

Employment Interviewing

The process of meeting and questioning job applicants to evaluate their suitability for a position.

Performance Appraisal

The systematic evaluation of an employee’s job performance and productivity with respect to the established job standards and objectives.