4. Forecasting the Brazilian real (B-intermediate). The chief economist of the Lusitania country fund believes that the
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4. Forecasting the Brazilian real (B-intermediate). The chief economist of the Lusitania country fund believes that the firm will be better served in the long term by using a composite forecasting model combining the forward rate and the Third Eye forecast.
a. What are the pros and cons of using composite forecasts?
b. Propose two design methods for creating composite forecasts.
c. Calculate actual forecasts under both methods.
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