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A Manager Wants to Choose One of Two Forecasting Alternatives

question 11

Essay

A manager wants to choose one of two forecasting alternatives.Each alternative was tested using historical data.The resulting forecast errors for the two are shown in the table.Analyze the data and recommend a course of action to the manager.
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Definitions:

Yield To Maturity

The total return anticipated on a bond if the bond is held until it matures, incorporating both interest payments and the capital gain or loss due to the difference between the purchase price and the maturity value.

Semi-annually

Semi-annually refers to an event or action that occurs twice a year, typically every six months.

Coupon Rate

The interest rate that a bond issuer agrees to pay to the holder annually, expressed as a percentage of the bond's face value.

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