Which of the following values of the exponential smoothing constant would emphasize the most recent forecast?
A. 1
B. 0
C. 2.0
D. cannot be determined from the information provided
Correct Answer:
B
Working note:
EMA for period t = (closing value at period t-1 - forecasted value at period t-1)* alpha + forecasted value at period t-1
When alpha = 0
Then,
EMA for period t = (closing value at period t-1 - forecasted value at period t-1)*0 + forecasted value at period t-1
Or,
EMA for period t = forecasted value at period t-1
Hence, alpha of 0, will cause exponential forecast to be equal to the most recent forecasted value.
Which of the following values of the exponential smoothing constant would emphasize the most recent forecast?...
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