Use the monthly data (September 2013 - November 2014) provided on the closing pr
ID: 2726030 • Letter: U
Question
Use the monthly data (September 2013 - November 2014) provided on the closing prices for Gold (GLD), NASDAQ, Oil (USO) and Facebook (FB).
What is the approximate value of mean absolute error (MAE) of forecasting based on 5 days moving average for Facebook prices?
4.10
6.08
5.89
4.56
Date GLD NASDAQ USO FB Sep-13 128 3771 37 50 Oct-13 128 3920 35 50 Nov-13 121 4060 33 47 Dec-13 116 4177 35 55 Jan-14 120 4104 35 63 Feb-14 128 4308 37 68 Mar-14 124 4199 37 60 Apr-14 124 4115 36 60 May-14 120 4243 38 63 Jun-14 128 4408 39 67 Jul-14 123 4370 36 73 Aug-14 124 4580 36 75 Sep-14 116 4493 34 79 Oct-14 113 4631 31 75 Nov-14 115 4713 29 74Explanation / Answer
Moving average = sum of last five days data/ 5
Absolute error = X- moving average
Date
X
moving average
Abs( X- MA)
13-Sep
50
13-Oct
50
13-Nov
47
13-Dec
55
14-Jan
63
50.5
12.5
14-Feb
68
53.75
14.25
14-Mar
60
58.25
1.75
14-Apr
60
61.5
1.5
14-May
63
62.75
0.25
14-Jun
67
62.75
4.25
14-Jul
73
62.5
10.5
14-Aug
75
65.75
9.25
14-Sep
79
69.5
9.5
14-Oct
75
73.5
1.5
14-Nov
74
75.5
1.5
959
66.75
Mean absolute error = sum of error terms / no. of error terms
=66.75 /11
= 6.07
Option B is correct.
Date
X
moving average
Abs( X- MA)
13-Sep
50
13-Oct
50
13-Nov
47
13-Dec
55
14-Jan
63
50.5
12.5
14-Feb
68
53.75
14.25
14-Mar
60
58.25
1.75
14-Apr
60
61.5
1.5
14-May
63
62.75
0.25
14-Jun
67
62.75
4.25
14-Jul
73
62.5
10.5
14-Aug
75
65.75
9.25
14-Sep
79
69.5
9.5
14-Oct
75
73.5
1.5
14-Nov
74
75.5
1.5
959
66.75
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