As a Consultant, You Have Been Thinking About Choosing the "Right

question 33

Multiple Choice

As a consultant, you have been thinking about choosing the "right" alpha (smoothing constant) for forecasting using exponential smoothing.Which of the following is most accurate about alpha?

• A)If alpha is high, speed of reaction to changes in actually low.
• B)If a firm produces standard product with relatively stable demand, alpha should be small.
• C)Products experiencing growth should be assigned higher alpha value.
• D)Alpha could be more than 1.0, and in this case (1-alpha) will become negative to make up for it.
• E)B and C

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Definitions:

Generally Accepted Accounting Principles

A set of widely adhered to accounting principles and norms for the preparation of financial statements.

Time Period Assumption

An accounting principle that states a business's activities can be divided into specific time periods, such as months, quarters, or years for reporting purposes.

Securities and Exchange Commission

An independent federal agency responsible for protecting investors, maintaining fair and orderly functioning of the securities markets, and facilitating capital formation.

IASB

stands for the International Accounting Standards Board, which is an independent, private-sector body that develops and approves International Financial Reporting Standards (IFRS).