You must determine whether there is a forecast bias in the forward rate. You apply regression analysis
Question:
S = a0 + a1 (F)
The regression results are as follows:
Coefficient Standard Error
a0 = .006 ........ .011
a1 = .800 ....... .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.
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