Question

You need to decide whether you should invest in a particular stock. You would like to invest if the price is likely to rise in the long run. You have data on the daily average price of this stock over the past 12 months. Your best action is to _______. Question 21 options: compute moving averages perform exponential smoothing compute the MAD statistic build a regression model

Answer 1

The best action is to estimate the least square trend model.

Step-by-step explanation:

To fit a straight line trend or a parabolic trend, the method of least square can be used.

The straight-line trend is represented as y = a + bx

From the question given, the stock is the independent variable and price is the dependent variable, this is because the price always depends on the stock.

Explanation | Hint for next step

The least-squares trend model is always dependent on the one dependent variable and one or more independent variables, the independent variable in the given question is the stock, and the dependent variable is the price, this is because the price is always dependent on the stock.

The trend model always represents the increase and decrease in price by using stock levels. Thus, the best action is to estimate the least square trend model.