Question: A Suppose that rt follows the model rt rt1 at 09at1 and we have r101 12 and r100 1 10 where rt1 denotes the 1

A Suppose that rt follows the model rt rt1 at 09at1 and we have r101 12 and r100 1 10 where rt1 denotes the 1 step ahead prediction of rt1 at the forecast origin t Compute r1011 The time series for the model is rt rt1 at 09at1 For the future cost we assume that there is no error in the model so the r101112 which shows that it will be 12 more than present value

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