# Question

Refer to the DJIA data in Problem 5- 39.

In Problem 5-39, The following table provides the Dow Jones Industrial Average (DJIA) opening index value on the first working day of 1994–2013: Develop a trend line and use it to predict the opening DJIA index value for years 2014, 2015, and 2016. Find the MSE for this model.

(a) Use an exponential smoothing model with a smoothing constant of 0.4 to predict the opening DJIA index value for 2014. Find the MSE for this.

(b) Use QM for Windows or Excel and find the smoothing constant that would provide the lowestMSE.

In Problem 5-39, The following table provides the Dow Jones Industrial Average (DJIA) opening index value on the first working day of 1994–2013: Develop a trend line and use it to predict the opening DJIA index value for years 2014, 2015, and 2016. Find the MSE for this model.

(a) Use an exponential smoothing model with a smoothing constant of 0.4 to predict the opening DJIA index value for 2014. Find the MSE for this.

(b) Use QM for Windows or Excel and find the smoothing constant that would provide the lowestMSE.

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