Which of the Following Smoothing Constants Would Make an Exponential

question 71

Multiple Choice

Which of the following smoothing constants would make an exponential smoothing forecast equivalent to a naive forecast?

• A) 0
• B) 1 divided by the number of periods
• C) 0.5
• D) 1.0
• E) cannot be determined

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Definitions:

Optimal Capital Structure

The best combination of debt and equity financing that maximizes a company's value while minimizing its cost of capital.

Debt Levels

The total amount of borrowing, represented as a ratio of debt to equity or a total dollar amount.

Excessive Risk

Engaging in financial activities that have a high chance of resulting in significant loss.

Operating Leverage

A measure of how revenue growth translates into growth in operating income, indicating the degree to which a firm can increase profits by increasing sales.