Understanding Moving Averages

The video tutorial introduces the concept of moving averages, explaining their use in science and stock market predictions. It focuses on simple moving averages, particularly a three-year moving average, and provides a step-by-step guide on calculating it. The tutorial also demonstrates how to plot these averages on a graph, highlighting their practical applications in investment strategies. The moving average is described as a subset of data that shifts as new data is collected, offering insights into trends over time.

What is a moving average primarily used for?

• Measuring economic growth

• Predicting weather patterns

• Predicting stock movements

• Calculating interest rates

In a simple moving average, what is the first step in the calculation process?

• Calculate the median

• Identify the subset to average

• Determine the total data set

• Plot the data on a graph

For a three-year moving average, which years are included in the subset for year 3?

• Years 3, 4, and 5

• Years 2, 3, and 4

• Years 4, 5, and 6

• Years 1, 2, and 3

What is the result of adding the numbers 6, 3, and 2 in the moving average calculation?

• 13

• 11

• 10

• 12

Why is it called a 'moving' average?

• Because it is used in moving industries

• Because it shifts as new data is added

• Because it changes every month

• Because it is calculated in motion

What happens when there is no data for the next year in a moving average?

• The average is recalculated

• You wait for new data

• The previous year's data is reused

• The process stops

What is the next step after calculating the moving average?

• Plot it on a graph

• Recalculate the average

• Share it with investors

• Ignore the data

What is the value of the moving average for year 2 in the example?

• 3.6

• 4.0

• 4.6

• 5.0

How do investors use the plotted moving average?

• To assess market trends

• To calculate dividends

• To predict future stock prices

• To determine company value

What is the significance of connecting the dots on the graph?

• It creates a histogram

• It highlights outliers

• It forms a trend line

• It shows data points