Question

QUESTION 1: In Exercises 5–8, use the method illustrated in Example 2 to determine moving averages by subtraction and addition. Determine the 6-day SMA for the ten consecutive trading day closing prices for SunEdison Inc. Listed below. $2.65, $2.63, $2.70, $2.63, $2.50, $2.65, $2.66, $2.56, $2.52, $2.37 * 5 points

Answer 1

The 6-day SMA for the ten consecutive trading day

= $2.63, $2.63, $2.62, $2.59, $2.54

Explanation:

Determining the 6-day SMA for the given values

using the addition and subtraction methodology

First we will determine the Average closing prices for 1 - 6 days

=
`(2.65 + 2.63 + 2.70 + 2.63 + 2.5 + 2.65)/(6)` = 15.76 / 6 = $2.626 ≈ $2.63

next we have to determine the SMA for days 2 - 7

= 2.63 -
`(2.65)/(6) + (2.66)/(6)` =
`(15.77)/(6)` ≈ $2.63

SMA for days 3 - 8

= 2.63 -
`(2.63)/(6) +(2.56)/(6) = (15.70)/(6)` ≈ $2.62

SMA for days 4 - 9

= 2.62 -
`(2.70)/(6) + (2.52)/(6) = (15.52)/(6)` ≈ $2.59

SMA for days 5 - 10

= 2.59 -
`(2.63)/(6) + (2.37)/(6) = (15.26)/(6)` ≈ $2.54

Hence the 6-day SMA for the ten consecutive trading day

= $2.63, $2.63, $2.62, $2.59, $2.54