Using the latest observation in a sequence of data to forecast the next period is:
A) a moving average forecast.
B) a naive forecast.
C) an exponentially smoothed forecast.
D) an associative forecast.
E) none of the choices are true.

Question

Quizplus · Accepted Answer

Using the latest observation in a sequence of data to forecast the next period is referred to as a "naive" or "random walk" forecast. This method assumes that the most recent observation is the best predictor of future values, and does not take into account any trends or patterns in the data. While this approach can be useful for short-term forecasting, it is generally not very accurate over the long-term.

Using the Latest Observation in a Sequence of Data to Forecast