Multiple Choice
Which of the following is one of the two broad categories of probability?
4. Probability
Basic Concepts of Probability
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Exponential smoothing constants must be given a value between which of the following ranges?
A
-1 and 1
B
0 and 100
C
0 and 1
D
1 and 10
Verified step by step guidance1
Understand the concept of exponential smoothing: Exponential smoothing is a forecasting technique that applies weighted averages of past observations, where the weights decrease exponentially over time. The smoothing constant (α) determines the weight given to the most recent observation.
Recognize the role of the smoothing constant (α): The smoothing constant controls how much emphasis is placed on recent data versus older data. A higher value of α gives more weight to recent observations, while a lower value gives more weight to older observations.
Identify the valid range for the smoothing constant: The smoothing constant (α) must be a value between 0 and 1. This ensures that the weights applied to past observations are valid probabilities and sum to 1.
Eliminate incorrect options: Review the provided ranges (-1 and 1, 0 and 100, 1 and 10) and eliminate those that fall outside the valid range of 0 to 1.
Conclude that the correct range for exponential smoothing constants is 0 and 1, as this is the only range that satisfies the requirements for the smoothing constant in exponential smoothing.
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