When Using an Exponential Smoothing Constant of 0

question 10

Multiple Choice

When using an exponential smoothing constant of 0.85, forecasts tend to:

• A) lag behind.
• B) overestimate sales at turning points.
• C) be identical to naïve forecasts.
• D) both a and c are correct.
• E) none of the above.

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Definitions:

Dividend Income

Income received from owning shares in a company, typically distributed from the company's earnings.

Debt Securities

Financial instruments representing money borrowed that must be repaid, including corporate and government bonds, which provide interest income to the holder.

High Liquidity

Refers to assets that can quickly be converted into cash with minimal impact on their price.

High Risk

Referring to investments or activities with a greater than usual potential for loss or that may involve significant uncertainty.