Daily Spot Exchange Rate, U.S. Dollars per Pound Sterling Date Rate Date Rate Date Rate 1-Apr-04 1.8764 13-Apr-04 1.8260 23-Apr-04 1.7674 2-Apr-04 1.8693 14-Apr-04 1.7802 26-Apr-04 1.7857 5-Apr-04 1.8140 15-Apr-04 1.7935 27-Apr-04 1.7937 6-Apr-04 1.8674 16-Apr-04 1.8108 28-Apr-04 1.7440 7-Apr-04 1.8410 19-Apr-04 1.8155 29-Apr-04 1.7849 8-Apr-04 1.8525 20-Apr-04 1.7916 30-Apr-04 1.7855 9-Apr-04 1.8422 21-Apr-04 1.7780 3-May-04 1.7780 12-Apr-04 1.8558 22-Apr-04 1.7688 4-May-04 1.7638 5-May-04 1.7832 13-May-04 1.7589 21-May-04 1.7560 6-May-04 1.7741 14-May-04 1.7588 24-May-04 1.7923 7-May-04 1.7942 17-May-04 1.7569 25-May-04 1.8396 10-May-04 1.7923 18-May-04 1.7757 26-May-04 1.8345 11-May-04 1.7744 19-May-04 1.7856 27-May-04 1.8788 12-May-04 1.7843 20-May-04 1.7710 28-May-04 1.8930 Click here for the Excel Data File

Algebra and Trigonometry (MindTap Course List)

4th Edition

ISBN:9781305071742

Author:James Stewart, Lothar Redlin, Saleem Watson

Publisher:James Stewart, Lothar Redlin, Saleem Watson

Chapter13: Sequences And Series

Section13.4: Mathematics Of Finance

Problem 2E

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Daily Spot Exchange Rate, U.S. Dollars per Pound Sterling
Date	Rate		Date	Rate	Date		Rate
1-Apr-04		1.8764		13-Apr-04		1.8260		23-Apr-04	1.7674
2-Apr-04		1.8693		14-Apr-04		1.7802		26-Apr-04	1.7857
5-Apr-04		1.8140		15-Apr-04		1.7935		27-Apr-04	1.7937
6-Apr-04		1.8674		16-Apr-04		1.8108		28-Apr-04	1.7440
7-Apr-04		1.8410		19-Apr-04		1.8155		29-Apr-04	1.7849
8-Apr-04		1.8525		20-Apr-04		1.7916		30-Apr-04	1.7855
9-Apr-04		1.8422		21-Apr-04		1.7780		3-May-04	1.7780
12-Apr-04		1.8558		22-Apr-04		1.7688		4-May-04	1.7638
5-May-04		1.7832		13-May-04		1.7589		21-May-04	1.7560
6-May-04		1.7741		14-May-04		1.7588		24-May-04	1.7923
7-May-04		1.7942		17-May-04		1.7569		25-May-04	1.8396
10-May-04		1.7923		18-May-04		1.7757		26-May-04	1.8345
11-May-04		1.7744		19-May-04		1.7856		27-May-04	1.8788
12-May-04		1.7843		20-May-04		1.7710		28-May-04	1.8930

Click here for the Excel Data File

(a) Make a line chart and fit an m-period moving average to the exchange rate data shown above with m = 2, 3, 4, and 5 periods. For each method, state the last MA value. (Round your answers to 4 decimal places.)

m-period	Next period forecast
2
3
4
5

(b) Which value of m do you prefer?

The preferred m value is   (Click to select)   2   3   4   5  . This value of m Using this allows one to forecast the weekly or monthly trends   (Click to select)   with   without  overreacting to daily fluctuations.

(c) Is a moving average appropriate for this kind of data?

(Click to select)   Yes   No  , a moving average is   (Click to select)   appropriate   inappropriate  .

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