If the Errors Produced by a Forecasting Method for 3

question 118

Multiple Choice

If the errors produced by a forecasting method for 3 observations are +3, +3, and −3, then what is the mean squared error?

• A) 9
• B) 0
• C) 3
• D) −3
• E) 2

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Definitions:

Intrinsic Value

The actual, fundamental value of an asset, irrespective of its market value, determined through objective calculation or estimation.

Cost of Capital

The rate of return that a company must earn on its investment projects to maintain its market value and attract funds.

Projects

Planned sets of interrelated tasks to be executed over a fixed period and within certain cost and other limitations.

Risk Premium

A risk premium is the additional return expected by an investor for taking on a higher level of risk, compared to a risk-free investment.