Assume that you have a monthly data. A one-month moving average is equivalent to exponentially smoothing with smoothing coefficient (W) equal to ________. a. 0 b. 1 c. 0.9 d. 0.5
Question
Assume that you have a monthly data. A one-month moving average is equivalent to exponentially smoothing with smoothing coefficient (W) equal to ________.
a. 0
b. 1
c. 0.9
d. 0.5
Solution
The answer is b. 1.
A one-month moving average is equivalent to exponentially smoothing with a smoothing coefficient (W) equal to 1. This is because a one-month moving average only considers the most recent month's data, which is similar to applying a smoothing coefficient of 1 in exponential smoothing, where the most recent observation is given full weight.
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