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Price of Abbott Labs stock. The yearly closing prices of
Chapter 14, Problem 62SE(choose chapter or problem)
Price of Abbott Labs stock. The yearly closing prices of Abbott Laboratories stock are shown in the table on the next page.
a. Use exponential smoothing with w = .8 to forecast the 2012 and 2013 closing prices. If you buy at the end of 2011 and sell at the end of 2013, what is your expected gain (loss)?
b. Repeat part a using Holt’s method with w = .8 and v = .5.
c. In which forecast do you have more confidence? Explain.
Questions & Answers
QUESTION:
Price of Abbott Labs stock. The yearly closing prices of Abbott Laboratories stock are shown in the table on the next page.
a. Use exponential smoothing with w = .8 to forecast the 2012 and 2013 closing prices. If you buy at the end of 2011 and sell at the end of 2013, what is your expected gain (loss)?
b. Repeat part a using Holt’s method with w = .8 and v = .5.
c. In which forecast do you have more confidence? Explain.
ANSWER:
Step 1 of 15
(a)
Compute the Exponentially smoothed series.
The formula for exponentially smoothed series is as follows:
Year 1990
