In a moving average method, when a new observation becomes available, the new average is computed by including the new observation and ________.
A) dropping the oldest observation
B) keeping the previous m observations
C) dropping the youngest previous observation
D) keeping any previous m - 1 observations

Question

Quizplus · Accepted Answer

In a moving average method, the new average is computed by including the new observation and dropping the oldest observation. This is because the moving average method is used to smooth out fluctuations in a time series data and by dropping the oldest observation, we are maintaining the same number of observations in the average calculation.

In a Moving Average Method, When a New Observation Becomes