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You have the following daily price data for a company share.  The prices for the past 7 days are $8.04, $8.09, $8.43, $8.54, $9.75, $8.80 and $9.51 respectively.  Use it to compute the 6-day moving average over the period.

Question

You have the following daily price data for a company share.  The prices for the past 7 days are 8.04,8.04, 8.09, 8.43,8.43, 8.54, 9.75,9.75, 8.80 and $9.51 respectively.  Use it to compute the 6-day moving average over the period.

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Solution

To calculate the 6-day moving average for the given data, we need to take the average of the share prices for each consecutive 6-day period.

Here's how to do it:

  1. First, we need to group the data into 6-day periods. Since we have 7 days of data, we will have two 6-day periods. The first period includes the prices from the first day to the sixth day (8.04,8.04, 8.09, 8.43,8.43, 8.54, 9.75,9.75, 8.80) and the second period includes the prices from the second day to the seventh day (8.09,8.09, 8.43, 8.54,8.54, 9.75, 8.80,8.80, 9.51).

  2. Next, we calculate the average for each 6-day period. To do this, we add up all the prices in the period and then divide by 6 (the number of days in the period).

For the first period: (8.04+8.04 + 8.09 + 8.43+8.43 + 8.54 + 9.75+9.75 + 8.80) / 6 = $8.61 (rounded to two decimal places)

For the second period: (8.09+8.09 + 8.43 + 8.54+8.54 + 9.75 + 8.80+8.80 + 9.51) / 6 = $8.85 (rounded to two decimal places)

So, the 6-day moving averages for the given data are 8.61and8.61 and 8.85 respectively.

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