The data below consist of the closing price of the common stock of the American

Question

The data below consist of the closing price of the common stock of the American Telephone and Telegram Corporation on 10 recent trading days.

Time            Price         Time(t)        Price

1            $24.10        6               $22.73

2                  23.80          7                 22.60

3                  23.39          8                 21.76

4                  22.90          9                 22.14

5                  22.10          10               21.69

a) using a five-period moving average, forecast the price of the stock for period 10.

b) what is the error of the forecast in #-a?

c) using a five-period moving average, forecast the price of the stock for period 11.

Explanation / Answer

Average of 5 periods Time Price Forecast 1 $24.10 2 $23.80 3 $23.39 4 $22.90 5 $22.10 6 $22.73 $23.26 7 $22.60 $22.98 8 $21.76 $22.74 9 $22.14 $22.42 10 $21.69 $22.27 11 $22.18

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