Question

As compared to a simple moving average, the weighted moving average is:

1) Smoother
2) More readily able to identify random variations
3) More reflective of the most recent periods
4) Easier to compute
5) Less reflective of the most recent periods

Answer 1

The weighted moving average is more reflective of the most recent periods and is smoother and more able to identify random variations compared to a simple moving average.

Step-by-step explanation:

The weighted moving average is more reflective of the most recent periods when compared to a simple moving average. Unlike a simple moving average which gives equal weight to all periods, a weighted moving average assigns different weights to different periods, with higher weights given to more recent periods. This means that the weighted moving average places more emphasis on the most recent data points, making it smoother and more able to identify random variations in the data.