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20. Testing for a Forecast Bias You must determ whether there is a forecast bias in the forward rate. You apply regression analysis to test
20. Testing for a Forecast Bias You must determ 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 = 2g + a(F) The regression results are as follows: COEFFICIENT STANDARD ERROR | an = .006 an = .800 .011 .05 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 fc o f s 20. Testing for a Forecast Bias You must determ 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 = 2g + a(F) The regression results are as follows: COEFFICIENT STANDARD ERROR | an = .006 an = .800 .011 .05 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 fc o f s
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