Cash bonuses paid to financial investment employees were reduced during the 2007 economic recession and have shown signs of rebounding with the recent recovery. The following data show the average cash bonus, in thousands of dollars, for New York City investment employees over an eight-year period. These data can also be found in the Excel file average bonus.xlsx.

Year Average Bonus

($000)

Year Average Bonus

($000)

2005 149.8 2009 140.6 2006 191.4 2010 139.0 2007 177.8 2011 111.3 2008 100.9 2012 121.9

a. Using a three-period simple moving average, forecast the average cash bonus for a financial investment employee in New York City in 2013.

b. Calculate the MAD for the forecast in part a.

c. Using a two-period weighted moving average with the weights 3 and 2, forecast the average cash bonus for a financial investment employee in New York City in 2013.

d. Calculate the MAD for the forecast in part c.

e. Which forecast do you have most confidence in?

AppendixLO1