Gamma Corp. has incurred large losses over the last ten years due to exchange rate fluctuations of the Egyptian pound (EGP), even though the company has used a market-based forecast based on the forward rate. Consequently, management believes its forecasts are biased. The following regression model was estimated to determine if the forecasts over the last ten years were biased: Sq=a0 +0Ft-1+ME where Sy is the spot rate of the pound in year 1 and F-1 is the forward rate of the pound in year 1-1. Regression results reveal coefficients of ao = 0 and a1 = 1.3. Thus, Gamma has reason to believe that its past forecasts have spot rate the realized overestimated b None of these are correct. underestimated d correctly estimated