12) a. .

The data appear to follow a horizonal pattern 3AM Forcecast Absolute Squared
1 9 5 .

2 9 3 .

3 94 .

4 9 6 .
9 4 . 0 2 . 0L .
0 04 .

5 98 .
9 43.
0 .
967 6 . 36 7 0 . 134
6 9 7 .
96 .
0 .
1 0A .
6 01 .

7 9 8 . 9 7 .
01 . 0 1 .
0 01 .

j 10 5 .
. 77
9 0 73.
0 75 .
0 530
.

G 9 9 .
10 -
01 . 0 1 .
0 01 .

b) MSE (3-month) = 1 082

.
0 .
120247 10 9 7 .
10 07 .
-
0 37 . 0 37. 0 154 .

G 11 9 6 . 10 03 .
-0 . 43 0 45.
0 188
.

MSE (4-month) =
1 10875
.
0 130594
.
12 96
.
9 73 .
-

0 15 .
0 13 .
0 018.

go Sum 0 47 .
2 53 .
1 00L .

Use 3-month moving averages

MA

2) Forecasted interest rate in 15th months is 9 63 %

.
as

3 month
per moving average

13)

MSE (3-month) =
17980 09 .
1998 765 .

MSE (x =
2) = 27017 28 .
2528 . Obs
_

11
> MSE (3-month) is better but <= 2

was penalized by including month a

MSE (a = 2, 4 12 m)
-

= (19 .
36 + 553 .
1904

+ 3459 322 .
+ 2803 .
406 +2269 783 .

+ 1016 .
75 + 1979 452 + 1183 . .
854

+ 1408 .
181) : 9

= 1469 1632 .
72
-

> MJE (x= · 2) is better

2) Next month a = 2 =
(267 5257355) 00 .
. + 02
.
(250)
= 260