In the Exponential Smoothing (ES) Technique, the Value of Alpha

question 14

Multiple Choice

In the exponential smoothing (ES) technique, the value of alpha, the smoothing constant:

• A)may assume any non-negative value.
• B)determines the forecasting model's responsiveness to abrupt changes.
• C)typically is at the higher end in the range of possible values.
• D)is preset by the analyst and not subject to validity testing.

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Definitions:

Adjusting Entry

A journal entry made at the end of an accounting period to allocate revenue and expenses to the appropriate period, ensuring accurate financial reporting.

Long-Term Investment

Investments held for an extended period, typically exceeding one year, such as stocks, bonds, or real estate, aiming for prolonged growth.

Fair Value

A valuation of an asset or liability determined by the price it would fetch if sold, or the cost to transfer it, in a smooth transaction among participants in the market.

Adjusting Entry

A journal entry made at the end of an accounting period to allocate income and expenditures to the appropriate periods.