I need to know why weighting is useful in calculating moving average and how it is calculated. The “how” I already have in technical terms, but I need it explained to me in laymen’s terms.
Also, I need help with the following:
The yield on a 30-year treasury note at the end of each year since 1990 is recorded below. Compute a five-year (1) moving average and (2) weighted moving average using weights of .1, .1, .2, .3, and .3, respectively. Describe the trend in yield both in both narrative and graphical form.
Please see the attached Excel sheet.
A moving average is just a time series showing the average value of some number of previous points. It is like a “tail” that keeps following the data as it moves. In this problem, we’re asked for two types of 5-year moving averages. For each year, both averages take in the data from the 5 most recent years …
The solution determines the weighted moving average. The yield on a 30-year treasury note at the end of each year are determined.