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2. A. The following table gives the acmal change in the log of sales of Cisco Systems From 1Q:2001 to 4Q:2001, along with the forecasts

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2. A. The following table gives the acmal change in the log of sales of Cisco Systems From 1Q:2001 to 4Q:2001, along with the forecasts from the regression model A in (53165;) = 0.0661 + 0.469815 ln (Sales,_1) estimated using data from 3Q:1991 to 4Q:2000. (Note that the observations after the fourth quarter of 2000 are out of sample.) Actual Values of Changes Forecast Values of Changes in the Log of Sales in the Log of Sales Date A In (Sales,) A In (Sales,) 1Q:2001 0.1308 0.1357 2Q:2001 0.0345 0.1299 3Q:2001 -0.3557 0.1271 4Q:2001 0.0954 0.1259 A. Calculate the RMSE for the out-ofsample forecast errors. B. Compare the forecasting performance of the model given with that of another model having an outof-sample RMSE of 20 percent. B. Explain AR model and random walk model. Explain why we cannot use standard linear regression analysis in a random walk time series

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