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What are the limitations of trend line long-term extrapolation? What are the limitations of moving average...

  1. What are the limitations of trend line long-term extrapolation?
  2. What are the limitations of moving average technique?

NOTE: Your answer to each part must include at least two references. Give page numbers where applicable.

Math   Statistics-And-Probability   
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Answer #1

a-1) - limitation of trend line long term extrapolation is that as it would not very appropriate for projection unless and untill the same situation (i.e., factors like temperature ,economy,any other factor) continues tto prevail same during the period of extraploration but in actual this never happen.

2) It doesn't ensure the elimination of seasonal and cyclic variation (for long period these variation will also vary) which will affect our projection.

b-1) - There is no strict rule through which one decides the number of years(periods) in a group.Hence,the element of subjectivity is introduced in this method.So,for the same time series there can be a number of trend line.

b-2)- A few years in the beginning and at the end of the series are left over without the moving averages being entered against them,Hence no points are plotted against these years causing loss of information

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