D | Question 13 37.5 pts Moving Average for 30YrFixed Double Exponenitial Smooth

Question

D | Question 13 37.5 pts Moving Average for 30YrFixed Double Exponenitial Smoothing for 30YrFixed Method Method Deta 30Yrfixed Length 228 Data 30YrFixed Length 228 Smoothing Constants a (level) 09 y (trend) 0.1 Accuracy Measures MAPE 253128 MAD 013859 MSD 0.03730 Missins Moving Average Length 3 Accuracy Measures ???? 201208 MAD 0.10876 MSD 0.02099 Forecasts Period Forecast Lower Upper 229 3 81333 3.52938 4.09728 A researcher wants to predict 30 year foxed rate mortgage interest rates over the last few decades The person is unsure whether a double exponential smoothing model or moving average model is a better fht. The researcher runs a variety of models and finds the best double ES and best MA as listed above. Note interest rates varied widely from over 80% to under 2.0%. O The best model based upon the MSE is the Double exponential smoothing O The best model, uses a moving average lag 4 which averages current Yt with Yt-1, Yt-2 and Yt-3 The best model based upon the MSE is the Moving average lag-3 D 1 Question 14 37.5 pts Moving Average for 30Y Fixed Data savxed Length 228 Data 3ovrFixed Length 228 earch

Explanation / Answer

The best model based upon the MSE is the Double exponential Smothing because,Moving average(MA) assumes that there is no trend in the data also in moving average the past observations are weighted equally but in dounle exponential smoothing the exponential functions are used to assign exponentially decreasing weights over time.

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