Question

In: Statistics and Probability

Daily Spot Exchange Rate, U.S. Dollars per Pound Sterling Date Rate Date Rate Date Rate 1-Apr-04...

Daily Spot Exchange Rate, U.S. Dollars per Pound Sterling
Date	Rate		Date	Rate		Date	Rate
1-Apr-04		1.8564	13-Apr-04		1.8160	23-Apr-04		1.7674
2-Apr-04		1.8293	14-Apr-04		1.7902	26-Apr-04		1.7857
5-Apr-04		1.8140	15-Apr-04		1.7785	27-Apr-04		1.7925
6-Apr-04		1.8374	16-Apr-04		1.8004	28-Apr-04		1.7720
7-Apr-04		1.8410	19-Apr-04		1.8055	29-Apr-04		1.7751
8-Apr-04		1.8325	20-Apr-04		1.7914	30-Apr-04		1.7744
9-Apr-04		1.8322	21-Apr-04		1.7720	3-May-04		1.7720
12-Apr-04		1.8358	22-Apr-04		1.7684	4-May-04		1.7907
5-May-04		1.7932	13-May-04		1.7584	21-May-04		1.7880
6-May-04		1.7941	14-May-04		1.7572	24-May-04		1.7908
7-May-04		1.7842	17-May-04		1.7695	25-May-04		1.8135
10-May-04		1.7723	18-May-04		1.7695	26-May-04		1.8142
11-May-04		1.7544	19-May-04		1.7827	27-May-04		1.8369
12-May-04		1.7743	20-May-04		1.7710	28-May-04		1.8330

(a) Make a line chart and fit an m-period moving average to the exchange rate data shown above with m = 2, 3, 4, and 5 periods. For each method, state the last MA value. (Round your answers to 4 decimal places.)

m-period	Next period forecast
2
3
4
5

Expert Solution

Answer:

last MA value:

m-period	Next period forecast
2 period MA	1.8350
3 period MA	1.8280
4 period MA	1.8244
5 period MA	1.8177

Calculation:

Rate

2 period MA

3 period MA

4 period MA

5 period MA

1.8564

1.8293

1.814

1.8429

1.8374

1.8217

1.8332

1.841

1.8257

1.8269

1.8343

1.8325

1.8392

1.8308

1.8304

1.8356

1.8322

1.8368

1.8370

1.8312

1.8308

1.8358

1.8324

1.8352

1.8358

1.8314

1.816

1.8340

1.8335

1.8354

1.8358

1.7902

1.8259

1.8280

1.8291

1.8315

1.7785

1.8031

1.8140

1.8186

1.8213

1.8004

1.7844

1.7949

1.8051

1.8105

1.8055

1.7895

1.7897

1.7963

1.8042

1.7914

1.8030

1.7948

1.7937

1.7981

1.772

1.7985

1.7991

1.7940

1.7932

1.7684

1.7817

1.7896

1.7923

1.7896

1.7674

1.7702

1.7773

1.7843

1.7875

1.7857

1.7679

1.7693

1.7748

1.7809

1.7925

1.7766

1.7738

1.7734

1.7770

1.772

1.7891

1.7819

1.7785

1.7772

1.7751

1.7823

1.7834

1.7794

1.7772

1.7744

1.7736

1.7799

1.7813

1.7785

1.772

1.7748

1.7738

1.7785

1.7799

1.7907

1.7732

1.7738

1.7734

1.7772

1.7932

1.7814

1.7790

1.7781

1.7768

1.7941

1.7920

1.7853

1.7826

1.7811

1.7842

1.7937

1.7927

1.7875

1.7849

1.7723

1.7892

1.7905

1.7906

1.7868

1.7544

1.7783

1.7835

1.7860

1.7869

1.7743

1.7634

1.7703

1.7763

1.7796

1.7584

1.7644

1.7670

1.7713

1.7759

1.7572

1.7664

1.7624

1.7649

1.7687

1.7695

1.7578

1.7633

1.7611

1.7633

1.7695

1.7634

1.7617

1.7649

1.7628

1.7827

1.7695

1.7654

1.7637

1.7658

1.771

1.7761

1.7739

1.7697

1.7675

1.788

1.7769

1.7744

1.7732

1.7700

1.7908

1.7795

1.7806

1.7778

1.7761

1.8135

1.7894

1.7833

1.7831

1.7804

1.8142

1.8022

1.7974

1.7908

1.7892

1.8369

1.8139

1.8062

1.8016

1.7955

1.833

1.8256

1.8215

1.8139

1.8087

1.8350

1.8280

1.8244

1.8177

Calculation: Formulae

Date	Rate	Computation for 2 Period MA	Computation for 3 Period MA	Computation for 4 Period MA	Computation for 5 Period MA
######	1.8564
######	1.8293
######	1.814	=(1.8293+1.8564)/2
######	1.8374	=(1.814+1.8293)/2	=(1.814+1.8293+1.8564)/3
######	1.841	=(1.8374+1.814)/2	=(1.8374+1.814+1.8293)/3	=(1.8374+1.814+1.8293+1.8564)/4
######	1.8325	=(1.841+1.8374)/2	=(1.841+1.8374+1.814)/3	=(1.841+1.8374+1.814+1.8293)/4	=(1.841+1.8374+1.814+1.8293+1.8564)/5
######	1.8322	=(1.8325+1.841)/2	=(1.8325+1.841+1.8374)/3	=(1.8325+1.841+1.8374+1.814)/4	=(1.8325+1.841+1.8374+1.814+1.8293)/5
######	1.8358	=(1.8322+1.8325)/2	=(1.8322+1.8325+1.841)/3	=(1.8322+1.8325+1.841+1.8374)/4	=(1.8322+1.8325+1.841+1.8374+1.814)/5
######	1.816	=(1.8358+1.8322)/2	=(1.8358+1.8322+1.8325)/3	=(1.8358+1.8322+1.8325+1.841)/4	=(1.8358+1.8322+1.8325+1.841+1.8374)/5
######	1.7902	=(1.816+1.8358)/2	=(1.816+1.8358+1.8322)/3	=(1.816+1.8358+1.8322+1.8325)/4	=(1.816+1.8358+1.8322+1.8325+1.841)/5
######	1.7785	=(1.7902+1.816)/2	=(1.7902+1.816+1.8358)/3	=(1.7902+1.816+1.8358+1.8322)/4	=(1.7902+1.816+1.8358+1.8322+1.8325)/5
######	1.8004	=(1.7785+1.7902)/2	=(1.7785+1.7902+1.816)/3	=(1.7785+1.7902+1.816+1.8358)/4	=(1.7785+1.7902+1.816+1.8358+1.8322)/5
######	1.8055	=(1.8004+1.7785)/2	=(1.8004+1.7785+1.7902)/3	=(1.8004+1.7785+1.7902+1.816)/4	=(1.8004+1.7785+1.7902+1.816+1.8358)/5
######	1.7914	=(1.8055+1.8004)/2	=(1.8055+1.8004+1.7785)/3	=(1.8055+1.8004+1.7785+1.7902)/4	=(1.8055+1.8004+1.7785+1.7902+1.816)/5
######	1.772	=(1.7914+1.8055)/2	=(1.7914+1.8055+1.8004)/3	=(1.7914+1.8055+1.8004+1.7785)/4	=(1.7914+1.8055+1.8004+1.7785+1.7902)/5
######	1.7684	=(1.772+1.7914)/2	=(1.772+1.7914+1.8055)/3	=(1.772+1.7914+1.8055+1.8004)/4	=(1.772+1.7914+1.8055+1.8004+1.7785)/5
######	1.7674	=(1.7684+1.772)/2	=(1.7684+1.772+1.7914)/3	=(1.7684+1.772+1.7914+1.8055)/4	=(1.7684+1.772+1.7914+1.8055+1.8004)/5
######	1.7857	=(1.7674+1.7684)/2	=(1.7674+1.7684+1.772)/3	=(1.7674+1.7684+1.772+1.7914)/4	=(1.7674+1.7684+1.772+1.7914+1.8055)/5
######	1.7925	=(1.7857+1.7674)/2	=(1.7857+1.7674+1.7684)/3	=(1.7857+1.7674+1.7684+1.772)/4	=(1.7857+1.7674+1.7684+1.772+1.7914)/5
######	1.772	=(1.7925+1.7857)/2	=(1.7925+1.7857+1.7674)/3	=(1.7925+1.7857+1.7674+1.7684)/4	=(1.7925+1.7857+1.7674+1.7684+1.772)/5
######	1.7751	=(1.772+1.7925)/2	=(1.772+1.7925+1.7857)/3	=(1.772+1.7925+1.7857+1.7674)/4	=(1.772+1.7925+1.7857+1.7674+1.7684)/5
######	1.7744	=(1.7751+1.772)/2	=(1.7751+1.772+1.7925)/3	=(1.7751+1.772+1.7925+1.7857)/4	=(1.7751+1.772+1.7925+1.7857+1.7674)/5
######	1.772	=(1.7744+1.7751)/2	=(1.7744+1.7751+1.772)/3	=(1.7744+1.7751+1.772+1.7925)/4	=(1.7744+1.7751+1.772+1.7925+1.7857)/5
######	1.7907	=(1.772+1.7744)/2	=(1.772+1.7744+1.7751)/3	=(1.772+1.7744+1.7751+1.772)/4	=(1.772+1.7744+1.7751+1.772+1.7925)/5
######	1.7932	=(1.7907+1.772)/2	=(1.7907+1.772+1.7744)/3	=(1.7907+1.772+1.7744+1.7751)/4	=(1.7907+1.772+1.7744+1.7751+1.772)/5
######	1.7941	=(1.7932+1.7907)/2	=(1.7932+1.7907+1.772)/3	=(1.7932+1.7907+1.772+1.7744)/4	=(1.7932+1.7907+1.772+1.7744+1.7751)/5
######	1.7842	=(1.7941+1.7932)/2	=(1.7941+1.7932+1.7907)/3	=(1.7941+1.7932+1.7907+1.772)/4	=(1.7941+1.7932+1.7907+1.772+1.7744)/5
######	1.7723	=(1.7842+1.7941)/2	=(1.7842+1.7941+1.7932)/3	=(1.7842+1.7941+1.7932+1.7907)/4	=(1.7842+1.7941+1.7932+1.7907+1.772)/5
######	1.7544	=(1.7723+1.7842)/2	=(1.7723+1.7842+1.7941)/3	=(1.7723+1.7842+1.7941+1.7932)/4	=(1.7723+1.7842+1.7941+1.7932+1.7907)/5
######	1.7743	=(1.7544+1.7723)/2	=(1.7544+1.7723+1.7842)/3	=(1.7544+1.7723+1.7842+1.7941)/4	=(1.7544+1.7723+1.7842+1.7941+1.7932)/5
######	1.7584	=(1.7743+1.7544)/2	=(1.7743+1.7544+1.7723)/3	=(1.7743+1.7544+1.7723+1.7842)/4	=(1.7743+1.7544+1.7723+1.7842+1.7941)/5
######	1.7572	=(1.7584+1.7743)/2	=(1.7584+1.7743+1.7544)/3	=(1.7584+1.7743+1.7544+1.7723)/4	=(1.7584+1.7743+1.7544+1.7723+1.7842)/5
######	1.7695	=(1.7572+1.7584)/2	=(1.7572+1.7584+1.7743)/3	=(1.7572+1.7584+1.7743+1.7544)/4	=(1.7572+1.7584+1.7743+1.7544+1.7723)/5
######	1.7695	=(1.7695+1.7572)/2	=(1.7695+1.7572+1.7584)/3	=(1.7695+1.7572+1.7584+1.7743)/4	=(1.7695+1.7572+1.7584+1.7743+1.7544)/5
######	1.7827	=(1.7695+1.7695)/2	=(1.7695+1.7695+1.7572)/3	=(1.7695+1.7695+1.7572+1.7584)/4	=(1.7695+1.7695+1.7572+1.7584+1.7743)/5
######	1.771	=(1.7827+1.7695)/2	=(1.7827+1.7695+1.7695)/3	=(1.7827+1.7695+1.7695+1.7572)/4	=(1.7827+1.7695+1.7695+1.7572+1.7584)/5
######	1.788	=(1.771+1.7827)/2	=(1.771+1.7827+1.7695)/3	=(1.771+1.7827+1.7695+1.7695)/4	=(1.771+1.7827+1.7695+1.7695+1.7572)/5
######	1.7908	=(1.788+1.771)/2	=(1.788+1.771+1.7827)/3	=(1.788+1.771+1.7827+1.7695)/4	=(1.788+1.771+1.7827+1.7695+1.7695)/5
######	1.8135	=(1.7908+1.788)/2	=(1.7908+1.788+1.771)/3	=(1.7908+1.788+1.771+1.7827)/4	=(1.7908+1.788+1.771+1.7827+1.7695)/5
######	1.8142	=(1.8135+1.7908)/2	=(1.8135+1.7908+1.788)/3	=(1.8135+1.7908+1.788+1.771)/4	=(1.8135+1.7908+1.788+1.771+1.7827)/5
######	1.8369	=(1.8142+1.8135)/2	=(1.8142+1.8135+1.7908)/3	=(1.8142+1.8135+1.7908+1.788)/4	=(1.8142+1.8135+1.7908+1.788+1.771)/5
######	1.833	=(1.8369+1.8142)/2	=(1.8369+1.8142+1.8135)/3	=(1.8369+1.8142+1.8135+1.7908)/4	=(1.8369+1.8142+1.8135+1.7908+1.788)/5

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Question

Daily Spot Exchange Rate, U.S. Dollars per Pound Sterling Date Rate Date Rate Date Rate 1-Apr-04...

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