For the data in Problem 5-42, develop an exponential smoothing model with a smoothing constant of 0.3. Using the MSE, compare this with the model in Problem 5-42.
In Problem 5-42, The following table gives the average monthly exchange rate between the U.S. dollar and the euro for 2009. It shows that 1 euro was equivalent to 1.289 U. S. dollars in January 2009. Develop a trend line that could be used to predict the exchange rate for 2010. Use this model to predict the exchange rate for January 2010 and February 2010.
Month Exchange Rate
January ............ 1.289
February .......... 1.324
March ........... 1.321
April ............. 1.317
May ............. 1.280
June ............. 1.254
July ............. 1.230
August ........... 1.240
September ......... 1.287
October .......... 1.298
November ......... 1.283
December ......... 1.311