Question

Silicon Co. has forecasted the Canadian dollar for the most recent period to be $0.73. The realized value of the Canadian dollar in the most recent period was $0.80. Thus, the absolute forecast error as a percentage of the realized value was ____%.

Answer 1

8.75%

Step-by-step explanation:

The forecast error refers to the actual value of the currency vs the expected value of the currency. A forecast is just an estimate or educated guess, and as any estimate it can be wrong.

The absolute forecast error = [(actual – forecast) / actual] x 100 = [$0.80 - $0.73) / $0.80] x 100 = 8.75%