Coffee is the world€™s second largest legal export commodity (after oil) and is the second largest source of foreign exchange for developing nations. The United States consumes about one-fifth of the world€™s coffee. The International Coffee Organization (ICO) computes a coffee price index using Colombian, Brazilian, and a mixture of other coffee data. Data are provided for the daily ICO price index (in $ US) from January 2013 to April 2013.

Here€™s an autoregressive model for the composite prices.

a) Here are the last several values of the series: 88.48, 134.45, 135.85, and 136.10. What price does this model predict for the next value in the series?
b) The next value in the series was, in fact, 138.90. Compute the APE.
c) Find a prediction based on a 2-point moving average. How does it compare with the AR model?

150.0 142.5 135.0 15 30 45 0 Time Dependent variable is: coffee 73 total cases of which 2 are missing R squared 88.7% R squared (adjusted)# 88.4% s-2.034 with 71-3# 54 degrees of freedom Variable Coefficient SE(Coeff) t-rat1o P-value Intercept 6.75323 5.9224 0.2581 Lagl Lag2 0,938229 0.1194 7.02 .0001 0,113135 0.1192 .9490,3459