When the Underlying Mean of a Time Series Is Very

question 9

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 = 15.
• 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 a = 0.30 should outperform a simple moving-average forecast with α = 0.01.

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Definitions:

Income Summary

An account in the ledger that aggregates all income and expense accounts to determine the net profit or loss for a certain period.

Revenue Accounts

Accounts that track the income generated from a company's primary operations and activities.

Expense Accounts

Financial accounts used to track money spent or costs incurred by a business in its operational activities.

Closing Entries

Journal entries made at the end of an accounting period to transfer the balances of temporary accounts to permanent ones, thereby preparing the books for the next period.