Company Has Calculated Its Running Sum of Forecast Errors to Be

question 42

Multiple Choice

company has calculated its running sum of forecast errors to be 500 and its mean absolute deviation is exactly 35.Which of the following is the company's tracking signal?

• A)Cannot be calculated based on this information
• B)About 14.3
• C)More than 35
• D)Exactly 35
• E)About 0.07

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Definitions:

Forward Rates

Future interest rates derived from current term structure of interest rates or from the interest rate swap market, predicting future financial market conditions.

Short-Run Exposure

Refers to the degree to which a company's financial performance is affected by fluctuations in foreign exchange rates over a short period.

Home Currency Approach

A method of currency risk management that converts all foreign currencies and related activity into the domestic currency of the company for analysis and reporting.