Assume That a Time-Series Forecast Is Generated for Future Demand

question 29

Multiple Choice

Assume that a time-series forecast is generated for future demand and subsequently it is observed that the forecast method did not accurately predict the actual demand. Specifically, the forecast errors were found to be: Mean absolute percent error = 10%
Cumulative sum of forecast errors = 0
Which one of the statements concerning this forecast is True?

• A) The forecast has no bias but has a positive standard deviation of errors.
• B) The forecast has a positive bias and a standard deviation of errors equal to zero.
• C) The forecast has no bias and has a standard deviation of errors equal to zero.
• D) The forecast has a positive bias and a positive standard deviation of errors.

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Definitions:

Stock Repurchase

A transaction in which a company buys back its own shares from the market, often to increase the value of remaining shares by reducing the supply.

Excess Cash

Funds that exceed the normal operating needs of a company, potentially available for investment or distribution to shareholders.

Net Income

The total profit of a company after all expenses and taxes have been subtracted from its total revenue.

Stock Dividend

A payment to shareholders in the form of additional shares instead of cash.