A Second-Order Autoregressive Model for Average Mortgage Rate Is $\text { Rate } \left. \left. _ { i } = - 2.0 + 1.8 \text { (Rate } \right) _ { i - 1 } - 0.5 \text { (Rate } \right) _ { i - 2 } .$

question 123

Short Answer

A second-order autoregressive model for average mortgage rate is: $\text { Rate } \left. \left. _ { i } = - 2.0 + 1.8 \text { (Rate } \right) _ { i - 1 } - 0.5 \text { (Rate } \right) _ { i - 2 } .$ .
If the average mortgage rate in 2012 was 7.0, and in 2011 was 6.4, the forecast for 2013 is
__________.

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