Question

Corporate triple-A bond interest rates for 12 consecutive months follow.

9.5

9.4

9.4

9.6

9.9

9.8

9.8

10.6

9.9

9.7

9.7

9.6

Develop three-month and four-month moving averages for this time series. (Round your answers to two decimal places.)

Month	Time Series Value	3-Month Moving Average Forecast	4-Month Moving Average Forecast
1	9.5	blank	blank
2	9.4	blank	blank
3	9.4	blank	blank
4	9.6		blank
5	9.9
6	9.8
7	9.8
8	10.6
9	9.9
10	9.7
11	9.7
12	9.6

Does the three-month or four-month moving average provide more accurate forecasts based on MSE? Explain.

The four-month moving average provides more accurate forecasts, because its MSE is smaller than that of the three-month moving average.The four-month moving average provides more accurate forecasts, because its MSE is larger than that of the three-month moving average.    The three-month moving average provides more accurate forecasts, because its MSE is larger than that of the four-month moving average.The three-month moving average provides more accurate forecasts, because its MSE is smaller than that of the four-month moving average.

(c)

Using the more accurate approach, what is the moving average forecast for the next month? (Round your answer to two decimal places.)

Answer 1

		3 period	4 period
week	sales	forecast	forecast
1	9.5
2	9.4
3	9.4
4	9.6	9.43
5	9.9	9.47	9.48
6	9.8	9.63	9.58
7	9.8	9.77	9.68
8	10.6	9.83	9.78
9	9.9	10.07	10.03
10	9.7	10.10	10.03
11	9.7	10.07	10.00
12	9.6	9.77	9.98

The three-month moving average provides more accurate forecasts, because its MSE is smaller than that of the four-month moving average.

c) moving average forecast for the next month =9.67