You need to decide whether you should invest in a particular stock. You would like to invest if the price is likely to rise in the long run. You have data on the daily average price of this stock over the past 12 months. Your best action is to
A) estimate a least square trend model.
B) compute the MAD statistic.
C) compute moving averages.
D) perform exponential smoothing.

Question

Quizplus · Accepted Answer

Estimating a least square trend model allows us to analyze the overall trend of the stock price over the 12-month period and make a prediction about whether the price is likely to rise or fall in the long run. The other options (MAD, moving averages, and exponential smoothing) are all methods of analyzing and smoothing the data, but do not provide a clear indication of the long-term trend.

You Need to Decide Whether You Should Invest in a Particular