For Single Exponential Smoothing,
A)Large Values of Alpha $\alpha$ ) Place More Emphasis on Recent Data
B)Small Values of )

question 42

Multiple Choice

For single exponential smoothing,

• A)Large values of alpha (\(\alpha\)) place more emphasis on recent data
• B)Small values of alpha (\(\alpha\)) place more emphasis on recent data
• C)Very volatile time series with substantial random variability should use a large value for alpha (\(\alpha\))
• D)Very stable time series with little random variability should use small values for alpha (\(\alpha\))

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Definitions:

Covariance

A measure of how two variables move in relation to each other, used in finance to diversify portfolios and minimize risk.

Beta

A measure of a stock's volatility in relation to the overall market, indicating the level of risk associated with a particular investment.

Market Risk

The risk of losses in financial markets due to factors such as economic recessions, political turmoil, or changes in interest rates, affecting the overall market.

Asset Allocation

The strategy of distributing investments among various asset classes, such as stocks, bonds, and cash, to achieve a desired risk-reward balance.