Use the following to answer the question(s) below.
The monthly returns on a social choice portfolio comprised of "green" companies are shown below for the last six months of 2007.
Month Monthly Return
July 2.2 %
August 2.5
September 1.8
October 1.4
November 1.1
December 1.9
-Use a single exponential smoothing (SES) model with α = 0.8 to forecast for January 2008. Assume that the forecast for December 2007 was 1.18 %.
A) 1.50
B) 1.18
C) 1.76
D) 1.90
E) 2.20

Question

Quizplus · Accepted Answer

Using single exponential smoothing with α = 0.8, we have:
SES(December) = 1.18 (given)
SES(January) = 0.8 x 1.18 + 0.2 x 1.9 = 1.504

Therefore, the forecast for January 2008 is 1.504 % which is closest to choice (C) 1.76.

Use the Following to Answer the Question(s) Below