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?

Question

Quizplus · Accepted Answer

To calculate the 3-day exponential moving average (EMA) using a 60% weight on the most recent price, we can use the formula:

EMA = (Weight x Price) + ((1 - Weight) x Previous EMA)

Using this formula, we can calculate the EMA for day 5 as follows:

EMA day 1 = Price day 1 = $39.00 
EMA day 2 = (0.6 x 39.07) + (0.4 x 39.00) = $39.042 
EMA day 3 = (0.6 x 38.95) + (0.4 x 39.042) = $39.0012 
EMA day 4 = (0.6 x 39.12) + (0.4 x 39.0012) = $39.05512 
EMA day 5 = (0.6 x 39.22) + (0.4 x 39.05512) = $39.068048

Therefore, the answer is B) $39.07.

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