The U. S. stock market experienced an economic recovery during 2011 and 2012 after a major recession. The data in the Excel file S& P 500.xlsx show the end of month values for the S& P 500 Index during these two years.
a. Construct a graph showing the S& P Index over time.
b. Forecast the S& P Index for the end of January 2013 using exponential smoothing with α = 0.2.
c. Calculate the MAD for the forecast in part b.
d. Forecast the S& P Index for the end of January 2013 using exponential smoothing with trend adjustment and setting α = 0.2 and β = 0.5.
e. Calculate the MAD for the forecast in part d.
f. In which forecast do you have the most confidence?