In determining monthly seasonal indexes, the first step is to construct a centred moving average with a period of:
A)24 months.
B)12 months.
C)6 months.
D)3 months.

Question

Quizplus · Accepted Answer

A centred moving average with a period of 12 months allows for the capture of seasonal patterns over a full year. This is commonly used in time series analysis for monthly data, where the seasonality is often annual. A period of 24 months would smooth out the seasonal pattern too much and a period of 6 or 3 months would not capture the full year's seasonal pattern.

In Determining Monthly Seasonal Indexes, the First Step Is to Construct