Daily spot exchange rates of US dollars per Pound Sterling during the most recent 10 days are given below. Days 1 2 3 4 5 6 7 8 9 10 Rate 1.82 1.83 1.81 1.84 1.86 1.83 1.84 1.78 1.79 1.82 (i) Use exponential smoothing with α = 0.1 and α = 0.3 (Set the initial forecast equal to the first actual data value). (ii) Compare standard errors for the two values of α. Which α can give a better forecast? Why? Make a one-period forecast using α with a better forecast.

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Daily spot exchange rates of US dollars per Pound Sterling during the most recent 10 days are given below. Days 1 2 3 4 5 6 7 8 9 10 Rate 1.82 1.83 1.81 1.84 1.86 1.83 1.84 1.78 1.79 1.82 (i) Use exponential smoothing with α = 0.1 and α = 0.3 (Set the initial forecast equal to the first actual data value). (ii) Compare standard errors for the two values of α. Which α can give a better forecast? Why? Make a one-period forecast using α with a better forecast.
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