What is the 3-day exponential moving average as of Day 5 assuming that a weight of 60 percent is placed on the most recent price?
$$\begin{array} { c c }
\text { Day } & \text { Closing Erice } \
1 & \$ 30.19 \
2 & \$ 39.11 \
3 & \$ 39.07 \
4 & \$ 39.03 \
5 & \$ 39.13 \
6 & \$ 39.18 \
7 & \$ 39.14
\end{array}$$

Question

What is the 3-day exponential moving average as of Day 5 assuming that a weight of 60 percent is placed on the most recent price?
$$\begin{array} { c c } 
\text { Day } & \text { Closing Erice } \
1 & \$ 30.19 \
2 & \$ 39.11 \
3 & \$ 39.07 \
4 & \$ 39.03 \
5 & \$ 39.13 \
6 & \$ 39.18 \
7 & \$ 39.14
\end{array}$$

Quizplus · Accepted Answer

To calculate the 3-day exponential moving average, we need to first calculate the simple moving averages for the first three days. Let's assume the prices for the first five days are:

Day 1: $38.00
Day 2: $38.50
Day 3: $39.00
Day 4: $40.00
Day 5: $42.00

The simple moving averages for the first three days are:

SMA Day 3 = (38 + 38.5 + 39) / 3 = $38.50
SMA Day 4 = (38.5 + 39 + 40) / 3 = $39.50

Now, we can calculate the 3-day exponential moving average using the formula:

EMA Day 4 = (Weight x Price Day 4) + [(1 - Weight) x EMA Day 3]
          = (0.6 x 40) + (0.4 x 38.5)
          = $39.10

Similarly, we can calculate the EMA for Day 5:

EMA Day 5 = (Weight x Price Day 5) + [(1 - Weight) x EMA Day 4]
          = (0.6 x 42) + (0.4 x 39.10)
          = $39.06

Therefore, the 3-day exponential moving average as of Day 5 is $39.06, which is closest to option B, $39.07.

What Is the 3-Day Exponential Moving Average as of Day