Answer Happy

Problem 1 An investor is planning to liquidate her investments in mutual funds and invest in real estate. Before making the change in her investment strategy, she wants to forecast the price of mutual funds for the next 2 months. She has collected the following data on the average fund prices for the past 10 months: Month 1 2 3 4 5 6 7 8 9 10 45.1 43.8 42.1 42.7 42.6 41.5 42.2 41.7 Average Fund Price (in S) 43.4 42.9 0 0 0 5 5 5 5 0 5 0 a. Using a five-period moving average, forecast the average fund price for Period 11. b. Using exponential smoothing with a = 0.3, forecast the average fund price for Period Assume an initial forecast for Month 6 (F) as $42.15. c. Compute the MAD to determine the more accurate of the two forecasting methods.