As Alpha Increases the Exponential Smoothing Model

question 19

Multiple Choice

As alpha increases the exponential smoothing model

• A) produces sluggish forecasts.
• B) reacts quickly to changes in the data.
• C) reacts slowly to changes in the data.
• D) does not change.

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Definitions:

Annual Rate of Return

The percentage return on an investment over a one-year period, encompassing both capital gains and interest payments.

Expected Annual Net Income

The projection of a company's net income over a year, taking into account estimated revenues and expenses.

Average Investment

The middle amount invested over a period of time, often used in performance measurement or investment appraisal.

Unprofitable Segment

A division or part of a business that consistently operates at a loss, detracting from the overall profitability of the company.