Based on the Following Data,a Forecaster Used Simple Exponential Smoothing

question 2

Essay

Based on the following data,a forecaster used simple exponential smoothing and determined the following: S₀ = 19,S₁ = 18.6,S₂ = 19.08,S₃ = 19.064,S₄ = 19.851,and S₅ = 19.481. Calculate the average forecast error.

---

Definitions:

Risk-Free Asset

An investment with a certain return and no risk of financial loss, typically represented by government securities.

Risk Level

The degree of uncertainty and/or potential financial loss inherent in an investment decision.

Treasury Bills

Short-term government securities issued at a discount from face value and mature in a year or less, representing a safe and liquid investment option.

Risky Stock

A stock that carries a high level of volatility and uncertain returns, often associated with companies in emerging or highly competitive sectors.