Question

Which of the following exponential smoothing constant values puts the same weight on the most recent time series value as does a 5-period moving average?

1) 0.2
2) 0.25
3) 0.4
4) 0.5

Answer 1

To put the same weight on the most recent time series value as a 5-period moving average, the exponential smoothing constant value is approximately 0.3333.

Step-by-step explanation:

To put the same weight on the most recent time series value as a 5-period moving average, we need to find the exponential smoothing constant value. The exponential smoothing constant represents the weight given to the most recent value in the time series. To find the equivalent weight, we can use the formula:

Weight = 2 / (N + 1), where N is the number of periods in the moving average. In this case, N = 5.

Plugging in the values, we get:

Weight = 2 / (5 + 1) = 2 / 6 = 0.3333 (approximately).

Therefore, the exponential smoothing constant value that puts the same weight on the most recent time series value as a 5-period moving average is 0.3333 (approximately).