Answer:
MSE for 3-month MA = 0.0790
for 4-month, it is 0.066
Hence, 4-month MA is better.
Explanation:
In statistics, the mean squared error, MSEor mean squared deviation (MSD) of an estimator that is of a procedure for estimating an unobserved quantity, measures the average of the squares of the errors, that is, the average squared difference between the estimated values and the actual value.
This is used to ascertain the preferred or better forecast from 2 or more given parameters.
Kindly check the attachment for the step by step explaination of the MSE forecast.
