Explanation

In EWMA, the weights decay exponentially. The weight assigned to observation at time t-k is:

Weight(t-k) = (1-λ) × λ^(k-1)

Given λ = 0.850:

For yesterday (t-1): Weight(t-1) = (1-0.850) × λ^(0) = 0.15 × 1 = 0.15 = 15.00%

For day before yesterday (t-2): Weight(t-2) = (1-0.850) × λ^(1) = 0.15 × 0.850 = 0.1275 = 12.75%

Wait, this gives us 15.00% and 12.75%, which corresponds to Option B, not Option A.

Let me recalculate:

• Weight(t-1) = 1-λ = 1-0.850 = 0.15 = 15.00%
• Weight(t-2) = (1-λ) × λ = 0.15 × 0.850 = 0.1275 = 12.75%

Correct Answer: B (15.00% and 12.75%) - The weights are 15% for yesterday and 12.75% for the day before yesterday.