9. Exhibit 7 gives the actual change in the log of sales of Cisco Systems from 1Q 2019 to 4Q 2019, along with the forecasts from the regression model ln(Salest) ¼ 0.0068 þ 0.2633ln(Salest−1) estimated using data from 1Q 2001 to 4Q 2018. (Note that the observations after the fourth quarter of 2018 are out of sample.)

A. Calculate the RMSE for the out-of-sample forecast errors.
B. Compare the forecasting performance of the model given with that of another model having an out-of-sample RMSE of 2 percent.

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EXHIBIT 7 Date 1Q 2019 Actual Value of Changes in the Log of Sales Aln(Sales,) 0.0176 Forecast Value of Changes in the Log of Sales Aln(Sales,) 2Q 2019 -0.0491 3Q 2019 0.4030 4Q 2019 0.0356 0.0147 0.0107 0.0096 0.0093