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Suppose that Kent Co. is a US-based MNC that is evaluating its forecasts of the British pound. This MNC wishes to perform a graphical analysis
Suppose that Kent Co. is a US-based MNC that is evaluating its forecasts of the British pound. This MNC wishes to perform a graphical analysis as part of the evaluation. The following graph measures the forecasted value of the pound, while the vertical axis measures the realized value of the pound. On the following graph, use the blue line (circle symbols) to plot the perfect forecast line. Then, use the purple point (diamond symbol) to shade the region of the graph that corresponds to the region of upward bias. Finally, use the gray point (star symbol) to shade the area corresponding to the region of downward blas. > 1.7 Perfect Forecast Line 1.6 1.5 1.4 Region of upward bias REALIZED VALUE (U.S. Dollars per pound) 13 1.2 Region of downward bias 1.1 10+ 0.9 09 10 11 12 13 14 1.5 1.6 1.7 PREDICTED VALUE (U.S. Dollars per pound)
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