Corporate triple A bond interest rates for 12 consecutive months are as follows: 9.7 9.4 9.6...

Corporate triple A bond interest rates for 12 consecutive months are as follows: 9.7 9.4 9.6 9.8 9.6 9.9 9.9 10.5 9.8 9.5 9.4 9.4 If required, round your answer to two decimal places. (a) Choose the correct time series plot. (i) (ii) (iii) (iv) What type of pattern exists in the data? (b) Develop three-month and four-month moving averages for this time series. If required, round your answers to two decimal places. Week Sales 3 Month Moving Average 4 Month Moving Average 1 9.7 2 9.4 3 9.6 4 9.8 5 9.6 6 9.9 7 9.9 8 10.5 9 9.8 10 9.5 11 9.4 12 9.4 3-month moving average 4-month moving average MSE Does the three-month or the four-month moving average provide the better forecasts based on MSE? Explain. (c) What is the moving average forecast for the next month?

Expert Solution

a)

t	r	3 MONTH MA	4 mont MA		error ^2 in 3 month	error^2 in 4 month
1	9.7
2	9.4
3	9.6
4	9.8	9.566666667			0.054444444
5	9.6	9.6	9.625		0	0.000625
6	9.9	9.666666667	9.6		0.054444444	0.09
7	9.9	9.766666667	9.725		0.017777778	0.030625
8	10.5	9.8	9.8		0.49	0.49
9	9.8	10.1	9.975		0.09	0.030625
10	9.5	10.06666667	10.025		0.321111111	0.275625
11	9.4	9.933333333	9.925		0.284444444	0.275625
12	9.4	9.566666667	9.8		0.027777778	0.16

				MSE	0.148888889	0.169140625

t	r	3 MONTH MA	4 mont MA		error ^2 in 3 month	error^2 in 4 month
1	9.7
=1+A2	9.4
=1+A3	9.6
=1+A4	9.8	=AVERAGE(B2:B4)			=(B5-C5)^2
=1+A5	9.6	=AVERAGE(B3:B5)	=AVERAGE(B2:B5)		=(B6-C6)^2	=(B6-D6)^2
=1+A6	9.9	=AVERAGE(B4:B6)	=AVERAGE(B3:B6)		=(B7-C7)^2	=(B7-D7)^2
=1+A7	9.9	=AVERAGE(B5:B7)	=AVERAGE(B4:B7)		=(B8-C8)^2	=(B8-D8)^2
=1+A8	10.5	=AVERAGE(B6:B8)	=AVERAGE(B5:B8)		=(B9-C9)^2	=(B9-D9)^2
=1+A9	9.8	=AVERAGE(B7:B9)	=AVERAGE(B6:B9)		=(B10-C10)^2	=(B10-D10)^2
=1+A10	9.5	=AVERAGE(B8:B10)	=AVERAGE(B7:B10)		=(B11-C11)^2	=(B11-D11)^2
=1+A11	9.4	=AVERAGE(B9:B11)	=AVERAGE(B8:B11)		=(B12-C12)^2	=(B12-D12)^2
=1+A12	9.4	=AVERAGE(B10:B12)	=AVERAGE(B9:B12)		=(B13-C13)^2	=(B13-D13)^2

				MSE	=AVERAGE(F5:F13)	=AVERAGE(G6:G13)

b)

MSE for 3-mont h average is less than 4-month MSE

c)

MA for next month	forecast
3	9.433333
4	9.525

milcah answered 3 months ago

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