We have the values for all the variables except for expected exchange rates. We Ean use our data to infer what expected exchange rates were and also see how accurate these predietions were:

For each month in ewh year, calculate the inferred value of the expected exchange rate. Next, take the difference between this value you calculated and the actual olserved exchange rates at the following points:

$6$ months later

$1$ yeur later

$2$ years later

$5$ yeara later

$10$ years later

Aote that for some of your olservations you will not have the necssary future value to calculate the difference, so be careful.

For cach of these five time frames find the average value of this differene. Using these, answer the following questions:

If the VIP' equation held, and people were able to make ancurate predictions about future exchange rates, what would we expect these average values to lw$?$

Are the values you calculated sleser to this valuel?

Whate lame horizen gives the best results? poople to ascurately forecasi exchange ratest?