The Mean Absolute Deviation (MAD)and the Sum of Squares for Forecast

question 22

Multiple Choice

The mean absolute deviation (MAD) and the sum of squares for forecast error (SSE) are the most commonly used measures of forecast accuracy.The model that forecasts the data best will usually have the:

• A)lowest MAD and highest SSE
• B)highest MAD and lowest SSE
• C)lowest MAD and SSE
• D)highest MAD and SSE

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Definitions:

Interest Income

Income earned from the lending of funds or depositing funds in interest-bearing accounts.

Interest Expense

The cost incurred by an entity for borrowed funds, often recognized in financial statements as a non-operating expense.

Amortization

The process of spreading out a loan into a series of fixed payments over time, where part of each payment goes toward the principal amount borrowed and part goes toward interest.

Depreciation

A method of allocating the cost of a tangible asset over its useful life.