(a) Make an Excel line graph of the following bond yield data. Describe the pattern. Is there a consistent trend?
(b) Use exponential smoothing (MegaStat, MINITAB, or Excel) with α = .20. Use both methods A and B to initialize the forecast (the default in both MegaStat and MINITAB).
(c) Record the statistics of t. (MegaStat uses MSE and MSD; MINITAB uses MSD and MAPE. With Excel you will have to calculate these by creating cell formulas.)
(d) Do the smoothing again with α = .10 and then with α = .30, recording the statistics of t.
(e) Compare the statistics of t for the three values of α.
(f) Make a one-period forecast (i.e., t = 53) using each of the three values. How did affect your forecasts?

Transcribed Image Text:

U.S. Treasury 10-Year Bond Yields at Week's End (n = 52 weeks) Week Yield Week Yield Week Yield Week Yield 4/2/04 3.95 72104 4.63 10/1104 4.1012/3104 4.29 1705 4.28 1/14/05 4.25 1/21/05 4.19 1/28/05 4.19 2/4/05 4.14 2/11/05 4.06 2/1805 4.16 2/25/05 4.28 3/4/05 4.37 3/11/05 4.45 6/18/04 4.75 9/17/04 4.14 12/17/04 4.16 3/18/05 4.51 3/25/05 4.59 79/04 4.49 108/04 4.20 4/16/04 4.36 7/16/04 447 015/04 4.08 4/23/04 4.43 7/23/04 446 10/22/04 4.03 430/04 4.49 7/04 4.56 10/29/04 4.05 57/04 4.62 8/6/04 4.41 11/5/04 4.12 5/14/04 4.8 8/13/04 4.28 12/04 4.22 5/21/04 4.74 8/20/04 4.23 11/19/04 4.17 5/2804 4.68 8/27/04 4.25 1126/04 4.20 123/04 4.35 6/11/04 4.80 9/10/04 4.21 12/10/04 4.19 4/9/04 4.21 6/4/04 4.74 9/3/04 4.19 6/25/04 4.69 9/24/04 4.04 224/04 4.21