Suppose That You Are Using the Exponential Smoothing Forecasting Method

question 87

Multiple Choice

Suppose that you are using the exponential smoothing forecasting method, and this period's forecast (F_t) was 100% accurate (i.e., no error) . If α = .5, which of the following is definitely true?

• A) Next period's forecast will also be 100% accurate.
• B) Next period's forecast equals this period's actual.
• C) This period's forecast must be thrown out, and next period's forecast equals F_t-1 + α (A_t-1 α − F_t-1).
• D) Next period's forecast equals 50% of this period's forecast.
• E) Next period's forecast equals 50% more than this period's forecast.

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