The following table reports the percentage of stocks in a portfolio for nine qua

Question

The following table reports the percentage of stocks in a portfolio for nine quarters:

a) Construct a time series plot. What type of pattern exists in the data?

b) Use optimization to find a value of the exponential smoothing coefficient that results in a relatively small MSE.

c) Using the exponential smoothing model you developed in part b, what is the forecast of the percentage of stocks in a typical portfolio for the second quarter of year 3?

Quarter Stock (%) Year 1, qtr 1 29.8 Year 1, qtr 2 31.0 Year 1, qtr 3 29.9 Year 1, qtr 4 30.1 Year 2, qtr 1 32.2 Year 2, qtr 2 31.5 Year 2, qtr 3 32.0 Year 2, qtr 4 31.9 Year 3, qtr 1 30.0

Explanation / Answer

The following table reports the percentage of stocks in a portfolio for nine qua

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