Homework SourseThe following table reports the percentage of stocks in a po
The following table reports the percentage of stocks in a portfolio for nine quarters:
a) Construct a time series plot. What type of pattern exists in the data?
b) Use optimization to find a value of the exponential smoothing coefficient that results in a relatively small MSE.
c) Using the exponential smoothing model you developed in part b, what is the forecast of the percentage of stocks in a typical portfolio for the second quarter of year 3?
| Quarter | Stock (%) |
| Year 1, qtr 1 | 29.8 |
| Year 1, qtr 2 | 31.0 |
| Year 1, qtr 3 | 29.9 |
| Year 1, qtr 4 | 30.1 |
| Year 2, qtr 1 | 32.2 |
| Year 2, qtr 2 | 31.5 |
| Year 2, qtr 3 | 32.0 |
| Year 2, qtr 4 | 31.9 |
| Year 3, qtr 1 | 30.0 |
Solution
