NISM Certifications · NISM-Series-XV: Research Analyst · Fundamentals of Research
An analyst studies the revenue of an Indian firm using 12 consecutive quarterly values and calculates the average of the most recent 4 quarters, then slides that window forward one quarter at a time. Which statistical technique is being used?
This is a moving average. It averages a fixed number of the most recent observations and rolls the window forward each period, smoothing short-term fluctuations to reveal the underlying trend in the data.
- ALinear regression
- BMoving averageCorrect
- CStandard deviation
- DCoefficient of variation
Explanation
Averaging a fixed number of the latest observations and shifting the window forward period by period is a moving average. It smooths out short-term fluctuations and shows the underlying trend. Regression fits a line against an independent variable, which is not described here.
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