Question

The table below shows the actual closing daily stock prices for Umbrella Corporation for a few days in September and a Naive 1 forecast. Actual Price Naive 1 Forecast 81.371 83.41 81.791 81.37 80.121 81.79 79.7611 80.12 Calculate a 95% two-period-ahead forecast prediction interval. Take your calculations to two (2) decimal places. Hints: You will need to calculate the RMSE to make the prediction interval, and you will need to use the h- step-ahead formula in the "Prediction Intervals" notes. Lower: Upper:

Answer 1

Answer:

Given,

Let us consider,

Exponential smoothing forecast for time period

= alpha(last month forecast (actual)) + (1 - alpha)*last month forecast

= 0.3*22 + (1 - 0.3)*18

= 6.6 + 0.7*18

= 6.6 + 12.6

= 19.2

Exponential smoothing forecast for the given time period is 19.2