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What is the 4-day Simple Moving Average (SMA) for the following closing prices: [tex]$56[/tex], [tex]$61[/tex], [tex]$50[/tex], [tex]$57[/tex], [tex]$60[/tex], [tex]$58[/tex], and [tex]$57[/tex]?

A. [tex]$56[/tex], [tex]$61[/tex], [tex]$50[/tex], [tex]$57[/tex]

B. [tex]$56[/tex], [tex]$57[/tex], [tex]$56.25[/tex]

C. [tex]$56[/tex], [tex]$57[/tex], [tex]$56.25[/tex], [tex]$58[/tex]

D. [tex]$58[/tex], [tex]$56[/tex], [tex]$56.25[/tex], [tex]$57[/tex]

Answer :

We are given the closing prices:

[tex]$$56,\ 61,\ 50,\ 57,\ 60,\ 58,\ 57$$[/tex]

and we need to calculate the 4-day simple moving average (SMA).

A 4-day moving average is calculated by taking the sum of 4 consecutive closing prices and then dividing by 4. We will form four 4-day windows as follows:

1. First window (days 1–4):
The prices are [tex]$56$[/tex], [tex]$61$[/tex], [tex]$50$[/tex], and [tex]$57$[/tex].
The average is calculated as:

[tex]$$
\text{SMA}_1 = \frac{56 + 61 + 50 + 57}{4} = \frac{224}{4} = 56.
$$[/tex]

2. Second window (days 2–5):
The prices are [tex]$61$[/tex], [tex]$50$[/tex], [tex]$57$[/tex], and [tex]$60$[/tex].
The average is:

[tex]$$
\text{SMA}_2 = \frac{61 + 50 + 57 + 60}{4} = \frac{228}{4} = 57.
$$[/tex]

3. Third window (days 3–6):
The prices are [tex]$50$[/tex], [tex]$57$[/tex], [tex]$60$[/tex], and [tex]$58$[/tex].
The average is:

[tex]$$
\text{SMA}_3 = \frac{50 + 57 + 60 + 58}{4} = \frac{225}{4} = 56.25.
$$[/tex]

4. Fourth window (days 4–7):
The prices are [tex]$57$[/tex], [tex]$60$[/tex], [tex]$58$[/tex], and [tex]$57$[/tex].
The average is:

[tex]$$
\text{SMA}_4 = \frac{57 + 60 + 58 + 57}{4} = \frac{232}{4} = 58.
$$[/tex]

Thus, the sequence of 4-day SMA values is:

[tex]$$[56,\ 57,\ 56.25,\ 58].$$[/tex]

Comparing this with the answer options, we find that the correct option is:

c. \[tex]$56, \$[/tex]57, \[tex]$56.25, \$[/tex]58.

Thanks for taking the time to read What is the 4 day Simple Moving Average SMA for the following closing prices tex 56 tex tex 61 tex tex 50 tex tex 57. We hope the insights shared have been valuable and enhanced your understanding of the topic. Don�t hesitate to browse our website for more informative and engaging content!

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