Chapter 8, Problem 12P

Corporate triple A bond interest rates for 12 consecutive months are as follows:

1. a. Construct a time series plot. What type of pattern exists in the data?
2. b. Develop three-month and four-month moving averages for this time series. Does the three-month or the four-month moving average provide the better forecasts based on MSE? Explain.
3. c. What is the moving average forecast for the next month?