Q6.10 What are the main characteristics of accurate forecasts?

A. A simple regression model over the 1980-2003 period where the Y variable is the Disney year-end stock price and the X variable is Disney's earnings per share reads as follows (t statistics in parentheses)
Pt = —$1,661 + $31.388EPSt , ff2 = 86.8%
(-1.13) (12.03)
Use this model to forecast Disney's average stock price for the 2007-2009 period using the Value Line estimate of Disney's average earnings per share for 2007-2009. Discuss this share price forecast.
B. A simple regression model over the 1980-2003 period where the Y variable is the Disney year-end stock price and the X variable is Disney's book value pershare reads as follows (f statistics in parentheses)
Pf= $3,161 + $2.1826l/t , P 2 = 76.9%
(1.99) (8.57)
Use this model to forecast Disney's average stock price for the 2007-2009 period using the Value Line estimate of Disney's average book value per share for 2007-2009. Discuss this share price forecast.
C. A multiple regression model over the 1980-2003 period where the Y variable is the Disney year-end stock price and the X variables are Disney's earnings per share and book value per share reads as follows {t statistics in parentheses)