Question

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

Develop three-month and four-month moving averages for this time series.

If required, round your answers to two decimal places.

Month	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

Enter the Mean Square Errors for the three-month and the four-month moving average forecasts. If needed, round your answers to three decimal digits.

	3-month moving average	4-month moving average
MSE

What is the moving average forecast for the next month?

Answer 1

from given data:

		3 period	4 period
week	sales		forecast
1	9.7
2	9.4
3	9.6
4	9.8	9.57
5	9.6	9.60	9.63
6	9.9	9.67	9.60
7	9.9	9.77	9.73
8	10.5	9.80	9.80
9	9.80	10.10	9.98
10	9.50	10.07	10.03
11	9.40	9.93	9.93
12	9.40	9.57	9.80

since MSE =average sum of square of deviation between actual and forecast value

MSE for 3 month moving average =0.148

MSE for 4 month moving average =0.170

since MSE for 3 moving average is smaller, therefore 3 month moving average is better

moving average forecast for the next month =(9.5+9.4+9.4)/3 =9.433 ~ 9.43