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Method of moving averages is mainly used to
ACompute compound interest (typical) (typical)
BFit a normal curve (typical) (typical) (typical)
CCalculate variance (typical) (typical) (typical)
DSmooth out short-term fluctuations and reveal trend
Answer & Solution
Correct answer: D. Smooth out short-term fluctuations and reveal trend
1. Moving averages average a fixed number of consecutive observations.
2. By averaging, short-term irregular and seasonal effects cancel out.
3. The result is a smoother series highlighting the trend.
4. Hence (B) is correct.
_Source: Maharashtra Balbharati Std XII Mathematics & Statistics (Commerce), Ch 4 "Time Series", §4.2 ¶§4.2_