When the Underlying Mean of a Time Series Is Very

question 16

Multiple Choice

When the underlying mean of a time series is very stable and there are no trend,cyclical,or seasonal influences,

• A) a simple moving average forecast with n = 20 should outperform a simple moving average forecast with n = 3.
• B) a simple moving average forecast with n = 3 should outperform a simple moving average forecast with n = 20.
• C) a simple moving average forecast with n = 20 should perform about the same as a simple moving average forecast with n = 3.
• D) an exponential smoothing forecast with alpha = 0.30 should outperform a exponential smoothing forecast with alpha = 0.01.

Recognize the use of reputation and past experience to mitigate asymmetric information.

Analyze the impact of asymmetric information on market quality perception.

Comprehend the role of credit histories in identifying high-risk parties.

Identify the causes of lower prices for used goods in markets with information asymmetry.

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Definitions:

Plan's Maturity

The specified date at which the final payment for a financial instrument, such as a bond or loan, is due.

Budget Period

The specific time period for which a budget is prepared and used to forecast income and expenditure.

Financial Plan

A projection of a company’s financial statements into the future based on a series of assumptions about what the business and the environment will do. Part of a business plan.

Strategic Plan

A long-term business plan addressing broad issues of what a company’s management wants it to become and how it is to do business.