Stock Performance Decade Performance(%) 1830s 2.8 1840s 12.8 1850s 6.6 1860s 12.5 1870s 7.5 1880s 6.0 1890s 5.5 1900s 10.9 1910s 2.2 1920s 13.3 1930s -2.2 1940s 9.6 1950s 18.2 1960s 8.3 1970s 6.6 1980s 16.6 1990s 17.6 2000s -0.5 DO IN EXCEL How have stocks performed in the past? The data in StockPerformance shows the performance of a broad measure of stock performance (by percentage) for each decade from the 1830s through the 2000s. a. Plot the time series. b. Fit a three-year moving average to the data and plot the results. c. Using a smoothing coefficient of W = 0.50, exponentially smooth the series and plot the results. d. What is your exponentially smoothed forecast for the 2010s? e. Repeat c and d, using W = 0.25. f. Compare the results of c and e, that is, the results from using the different weights. Which of the two weights gives a higher forecast and which of the two weights is better for forecasting? g. What conclusions can you reach about how stocks have performed in the past? **You may combine your three plots for parts b and c (MA (3), W=0.50 and W=0.25) for easier comparison**
Stock Performance
Decade | Performance(%) |
1830s | 2.8 |
1840s | 12.8 |
1850s | 6.6 |
1860s | 12.5 |
1870s | 7.5 |
1880s | 6.0 |
1890s | 5.5 |
1900s | 10.9 |
1910s | 2.2 |
1920s | 13.3 |
1930s | -2.2 |
1940s | 9.6 |
1950s | 18.2 |
1960s | 8.3 |
1970s | 6.6 |
1980s | 16.6 |
1990s | 17.6 |
2000s | -0.5 |
DO IN EXCEL
How have stocks performed in the past? The data in StockPerformance shows the performance of a broad measure of stock performance (by percentage) for each decade from the 1830s through the 2000s.
a. Plot the time series.
b. Fit a three-year moving average to the data and plot the results.
c. Using a smoothing coefficient of W = 0.50, exponentially smooth the series and plot the results.
d. What is your exponentially smoothed forecast for the 2010s?
e. Repeat c and d, using W = 0.25.
f. Compare the results of c and e, that is, the results from using the different weights. Which of the two weights gives a higher forecast and which of the two weights is better for forecasting?
g. What conclusions can you reach about how stocks have performed in the past?
**You may combine your three plots for parts b and c (MA (3), W=0.50 and W=0.25) for easier comparison**
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