The Following Is the List of Mean Absolute Deviation (MAD)statistics

question 35

Multiple Choice

The following is the list of mean absolute deviation (MAD) statistics for each of the models you have estimated from time-series data: $$\begin{array} { | l | c | } \hline \text { Model } & \text { MAD } \\\hline \text { Linear Trend } & 1.38 \\\text { Quadratic Trend } & 1.22 \\\text { Eigdonental Trend } & 1.39 \\\text { Autorepressive(2) } & 0.71 \\\hline\end{array}$$ Based on the MAD criterion,the most appropriate model is

• A) linear trend
• B) quadratic trend
• C) exponential trend
• D) autoregressive(2)

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Definitions:

Zero Coupon Bond

A type of bond that does not pay periodic interest payments and is instead issued at a discount to its face value, which is the amount paid to the holder at maturity.

Risk-Free Rate

The expected return on an investment that carries no risk, commonly exemplified by the interest rate on government bonds.

Call Option

An option contract that grants the holder the right to buy an underlying asset at a predetermined price before the option expires, without the obligation to do so.

Intrinsic Value

The perceived or calculated true value of an asset, investment, or company based on fundamental analysis without regard to its market value.