Exponential smoothing. The following time series graph shows daily closing stock prices (adjusted for splits and dividends) for Google, Inc. from February 1, 2008, through June 30, 2008 (Source: Yahoo! Finance).

a) Which time series components are evident?
Single exponential smoothing (SES) models were found for these data. Examine the time series graphs on the next page showing two different smoothing coefficients values (a = 0.2 and a = 0.8).

b) In which graph is a larger value of used?

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Stock Price 600+ 575 550 525 500 475 450 + 4/1/2008 4/8/2008 4/16/2008 4/24/2008 5/2/2008 5/12/2008 5/20/2008 Day 5/29/2008 6/6/2008 6/16/2008 6/24/2008