BUSINESS ADMINISTRATION
BUSINESS ANALYTICS
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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To maximize forecast accuracy measures
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To smooth out random fluctuations in the time series
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To characterize the variable fluctuations by an exponential equation
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To transform a nonstationary time series into a stationary series
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Detailed explanation-1: -To characterize the variable fluctuations by an exponential equation.
Detailed explanation-2: -Moving averages, weighted moving averages and exponential smoothing methods are often used in forecasting. The main objective of each of these methods is to smooth out the random fluctuations in the time series.
Detailed explanation-3: -Expert-Verified Answer. The Objective of the smoothing method is to smooth out Random Fluctuation. Each technique is referred to as a “smoothing approach” since its goal is to “smooth out” the time series’ unpredictable fluctuations.
Detailed explanation-4: -Whereas in Moving Averages the past observations are weighted equally, Exponential Smoothing assigns exponentially decreasing weights as the observation get older. In other words, recent observations are given relatively more weight in forecasting than the older observations.
Detailed explanation-5: -Exponential Moving Average (EMA) and Simple Moving Average (SMA) are similar in that they each measure trends. The two averages are also similar because they are interpreted in the same manner and are both commonly used by technical traders to smooth out price fluctuations.