Which of the following statements about the method of Moving Average is true?
Group of answer choices
Most recent observation is always given the highest weight.
It gives random weight to all values in the computation.
It uses a series of arithmetic medians over time.
It cannot be used for forecasting.
The statement "Most recent observation is always given the highest weight" is true.
The correct statement about the method of Moving Average is:
Most recent observation is always given the highest weight.
To determine which of the statements about the method of Moving Average is true, let's go through each option:
1. "Most recent observation is always given the highest weight."
This statement is true. The Moving Average method assigns higher weights to more recent observations, which means that the most recent observation has the highest weight in the computation.
2. "It gives random weight to all values in the computation."
This statement is not true. The Moving Average method does not assign random weights. Instead, it assigns weights based on a specific formula. Typically, the weights decrease as we move further back in time.
3. "It uses a series of arithmetic medians over time."
This statement is not true. The Moving Average method calculates the average, not the median, over a specific period of time.
4. "It cannot be used for forecasting."
This statement is not true. The Moving Average method is frequently used for forecasting. It helps smooth out variations in data and can provide insights into trends and patterns.
Therefore, the only true statement about the method of Moving Average is: "Most recent observation is always given the highest weight."