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Assume that a brokerage firm concentrates on a few closely related industries. It has produced a set of estimates of earnings for 1985 and subsequently

Assume that a brokerage firm concentrates on a few closely related industries. It has produced a set of estimates of earnings for 1985 and subsequently recorded the earn-ings that actually occurred. These data are given below:

Industry Firm Previous Earnings Estimated Earnings Actual Earnings

A 1 1.05 1.10 1.05

2 1.32 1.37 1.35

3 3.50 4.25 3.25

B 4 2.06 2.10 2.12

5 2.08 2.13 2.12

6 2.60 3.25 2.80

7 1.07 1.06 1.06

C 8 2.00 2.70 2.40

9 0.55 0.52 0.54

10 1.18 1.16 1.20

B. Calculate the mean square forecasted error for this firm.

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