20 Testing for a forecast bias. You must determine whether there is a forecast bias in the forward rate.

You apply regression analysis to test the relationship between the actual spot rate and the forward rate forecast (F):

S ¼ a0 þ a1(F)

The regression results are as follows:

Based on these results, is there a bias in the forecast?
Verify your conclusion. If there is a bias, explain whether it is an overestimate or an underestimate.

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Coefficient ao = 0.006 Standard Error 0.011 a = 0.800 0.05