# Question

The Bank of New York Company was founded by Alexander Hamilton in 1784 and was a major commercial bank until its merger with the Mellon Financial Corporation in 2007. Their year- end financial reports for the final five years of independent operation give the following values for their liquid assets.

Year Liquid Assets ($ M)

2002 .......... 18,546

2003 .......... 22,364

2004 .......... 22,413

2005 .......... 19,881

2006 .......... 26,670

a) Use a 3-year moving average to predict what liquid assets would have been in 2007.

b) Predict the value for 2007 using a single exponential smooth with smoothing parameter α = 0.2.

Year Liquid Assets ($ M)

2002 .......... 18,546

2003 .......... 22,364

2004 .......... 22,413

2005 .......... 19,881

2006 .......... 26,670

a) Use a 3-year moving average to predict what liquid assets would have been in 2007.

b) Predict the value for 2007 using a single exponential smooth with smoothing parameter α = 0.2.

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