Which of the following statement is TRUE if the time series exhibits a negative trend in an exponential smoothing technique?
A) The forecast will lag the actual values.
B) The forecast will overshoot the actual values.
C) The mean square error will be zero.
D) The alpha value will be one.

Question

Quizplus · Accepted Answer

If a time series exhibits a negative trend in an exponential smoothing technique, the forecast will be biased and will overshoot the actual values. This is because the exponential smoothing technique assumes that the trend will continue in the future, so if the trend is negative, the forecast will still show a positive trend and overshoot the actual values.

Which of the Following Statement Is TRUE If the Time