The percentage of individual investors’ portfolios committed to 1 answer below »

The percentage of individual investors’ portfolios committed to stock depends on the state of the economy. The following table reports the percentage of stocks in a portfolio for nine quarters:

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a. Use exponential smoothing to forecast this time series. Consider smoothing constants of a = 0.2, 0.3, and 0.4. What value of the smoothing constant provides the best forecast?
b. What is the forecast of the percentage of assets committed to stocks for the nextquarter?

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