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ISCOM 305 WK4 Problem - Mary Hernandez

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Mary Hernandez has invested in a stock mutual fund and she is considering liquidating and investing in a bond fund. She would like to forecast the price of the stock fund for the next month before making a decision. She has collected the following data on the average price of the fund during the past 20 months.;Month Fund Price Month Fund Price;1 63 1/4 11 68 1/8;2 60 1/8 12 63 1/4;3 61 3/4 13 64 3/8;4 64 1/4 14 68 5/8;5 59 3/8 15 70 1/8;6 57 7/8 16 72 3/4;7 62 1/4 17 74 1/8;8 65 1/8 18 71 3/4;9 68 1/4 19 75 1/2;10 65 1/2 20 76 3/4;a. Using a 3-month moving average, forecast the fund price for month 21.;b. Using a 3-month weighted average with the most recent month weighted 0.60, the next most recent month weighted 0.30, and the third month weighted 0.10, forecast the fund price for month 21.;c. Compute an exponentially smoothed forecast using a=0.40 and forecast the fund price for month 21.;d. Compare the forecasts in (a), (b), and (c) using MAD and indicated the most accurate.

 

Paper#30384 | Written in 18-Jul-2015

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