This question refers to Problem 9. Use exponential smoothing with a smoothing constant of .2 and an initial value of 9.29 to forecast the yield for January 2007. Is this forecast better than the forecast made using the better moving average model? Explain.
Problem 9
The yield on a general obligation bond for the city of Davenport fluctuates with the market. The monthly quotations for 2006 are given in Table P-9.
Table P-9
MonthYield
January ……............. 9.29
February ……........... 9.99
March ……...............10.16
April ……................. 10.25
May …….................. 10.61
June …….................. 11.07
July …….................. 11.52
August…….............11.09
September ……........10.80
October …….............10.50
November …….........10.86
December …….......... 9.97