Moving averages often are used to identify movements in stock prices. Daily closing prices (in dollars per share) for SanDisk for August 16, 2002, through September 3, 2002, follow

a. Use a five-day moving average to smooth the time series. Forecast the closing price for September 4, 2002.
b. Use a four-day weighted moving average to smooth the time series. Use a weight of 0.4 for the most recent period, 0.3 for the next period back, 0.2 for the third period back, and 0.1 for the fourth period back. Forecast the closing price for September 4, 2002.
c. Use exponential smoothing with a smoothing constant of α = 0.7 to smooth the time series. Forecast the closing price for September 4, 2002.
d. Which of the three methods do you prefer?Why?

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Day August 16 August 19 August 20 August 21 August 22 August 23 Price (S) 16.45 15.60 15.09 16.42 16.21 15.22 Day August 26 August 27 August 28 August 29 August 30 September 3 15.75 17.40 17.32 15.96