For Which of the Following Values of the Smoothing Constant

question 42

Multiple Choice

For which of the following values of the smoothing constant w will the smoothed series catch up most quickly whenever the original time series changes direction?

• A)0.90
• B)0.50
• C)0.40
• D)0.10

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Definitions:

Yield To Maturity

The total return anticipated on a bond if the bond is held until it matures, incorporating both interest payments and the capital gain or loss due to the difference between the purchase price and the maturity value.

Semi-annually

Semi-annually refers to an event or action that occurs twice a year, typically every six months.

Coupon Rate

The interest rate that a bond issuer agrees to pay to the holder annually, expressed as a percentage of the bond's face value.