Q 2: Technical Forecasting: For this problem set, you will need to download some exchange rate data. The best site for this is FRED (Federal Reserve Economic Data). http://research.stlouisfed.org/fred2/categories/15 (Links to an external site.) or Yahoo Finance. Based on a sample of daily data covering the period five years, forecast the exchange rate. If your company must pay 50 million must pay 10 million foreign currency for supplies that it recently received from your foreign selected country (e.g., Mexico), how much you must pay based on your forecasting. Pick up three different dates.

Q3. Measuring Forecast Accuracy. You are hired as a consultant to assess a firms ability to forecast. The firm has developed a point forecast for two different currencies presented in the following table. The firm asks you to determine which currency was forecasted with greater accuracy.

Yen Actual Pound Actual

Period Forecast Yen Value Forecast Pound Value

1 $.0050 $.0051 $1.50 $1.51

2 .0048 .0052 1.53 1.50

3 .0053 .0052 1.55 1.58

4 .0055 .0056 1.49 1.52