Answered: Stock Performance Decade…

Calculus For The Life Sciences

2nd Edition

ISBN:9780321964038

Author:GREENWELL, Raymond N., RITCHEY, Nathan P., Lial, Margaret L.

Publisher:GREENWELL, Raymond N., RITCHEY, Nathan P., Lial, Margaret L.

Chapter2: Exponential, Logarithmic, And Trigonometric Functions

Section2.3: Applications: Growth And Decay

Problem 16E

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Stock Performance

Decade	Performance(%)
1830s	2.8
1840s	12.8
1850s	6.6
1860s	12.5
1870s	7.5
1880s	6.0
1890s	5.5
1900s	10.9
1910s	2.2
1920s	13.3
1930s	-2.2
1940s	9.6
1950s	18.2
1960s	8.3
1970s	6.6
1980s	16.6
1990s	17.6
2000s	-0.5

DO IN EXCEL

How have stocks performed in the past? The data in StockPerformance shows the performance of a broad measure of stock performance (by percentage) for each decade from the 1830s through the 2000s.

a. Plot the time series.

b. Fit a three-year moving average to the data and plot the results.

c. Using a smoothing coefficient of W = 0.50, exponentially smooth the series and plot the results.

d. What is your exponentially smoothed forecast for the 2010s?

e. Repeat c and d, using W = 0.25.

f. Compare the results of c and e, that is, the results from using the different weights. Which of the two weights gives a higher forecast and which of the two weights is better for forecasting?

g. What conclusions can you reach about how stocks have performed in the past?

**You may combine your three plots for parts b and c (MA (3), W=0.50 and W=0.25) for easier comparison**

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