excel for forecast

Question #1

The City Trip A Bond interest rates for 12 consecutive months were 9.5, 9.3, 9.4, 9.6, 9.8, 9.7, 9.8, 10.5, 9.9, 9.7, 9.6, and 9.6.

(1) Develop 3- and 4-month moving averages for this time series. Which moving average provides the better forecasts? Explain

(2) What is the moving average forecast for the next month?

Hint: Compare the mean squared errors to decide which method has a better forecast.

Question #2

The gas price in the past 12 days were $2.41, $2.63, $2.74, $2.90, $2.89, $2.66, $2.74, $2.60, $2.52, $2.74, $2.70, $2.54.

(1) Use a 4-day weighted moving average to smooth the time series. Use a weight of 0.4 for the most recent period, 0.3 for the next period back, 0.2 for the third period back, and 0.1 for the fourth period back. Forecast the price for the 13th day.

(2) Use exponential smoothing with a smoothing constant of α=0.7 to smooth the time series. Forecast the price for the 13th day.

(3) Which of the two methods do you prefer? Why?

Hint: Compare the mean squared errors to decide which method has a better forecast.