In the Exponential Smoothing Formula for Updating the Level of the Series,A_t

question 114

Multiple Choice

In the exponential smoothing formula for updating the level of the series,A_t = αy_t + (1 - α) A_t - 1,what does α represent?

• A) The weighted average of the exponentially declining weights.
• B) The speed of decline in the weights of older observations.
• C) The initial value of the time series.
• D) The last value of the time series.

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Definitions:

Opportunity Costs

The advantages that a person, business, or investor loses by selecting one option instead of another.

Sunk Costs

Past expenses that have already been incurred and cannot be recovered, and therefore should not affect future business decisions.

Fixed Costs

Fixed costs are business expenses that remain constant regardless of the level of production or sales.

Cost Of Capital

The rate of return that a business needs to generate from its investments in order to cover the cost of raising funds, either through debt or equity.