A Second-Order Autoregressive Model for Average Mortgage Rate Is

question 89

Short Answer

A second-order autoregressive model for average mortgage rate is:
Rateᵢ = - 2.0 + 1.8(Rate)ᵢ₋₁ - 0.5 (Rate)ᵢ₋₂.
If the average mortgage rate in 2010 was 7.0, and in 2009 was 6.4, the forecast for 2011 is ________.

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Definitions:

Automatic Responses

Involuntary reactions to stimuli, not requiring conscious thought, such as reflex actions.

Subconscious Responses

Reactions that occur without conscious thought, often reflexes or actions triggered by stimuli below the level of conscious awareness.

Voluntary

Referring to actions or movements under conscious control by the individual.

Anterior Roots

The front part of a spinal nerve that carries motor output from the spinal cord to the body's muscles.