Jeff Madura, Ariful Hoque, Chandrasekhar Krishnamurti, International Financial Management, 2nd Asia-Pacific Edition.

© 2021 Cengage Australia

Pty Ltd. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
 FORECASTING TECHNIQUES
Mixed Forecasting
 Use a combination of forecasting techniques (Exhibit 8.2)
 Mixed forecast is then a weighted average of the various forecasts developed

Guidelines for Implementing a Forecast

 Apply forecasts consistently within the MNC
 Measure impact of alternative forecasts
 Consider other sources of forecasts.

Because no single forecasting

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EXHIBIT 8.2 FORECASTS OF THE CHINESE YUAN DRAWN FROM EACH
FORECASTING TECHNIQUE

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 FORECAST ERROR
Measurement of forecast error

Forecast errors among time horizons

 The potential forecast error for a particular currency depends on the forecast horizon
Forecast error over time periods
 The forecast error for a given currency changes over time
Forecast errors among currencies (Exhibit 8.3)
 The ability to forecast currency values may vary with the currency of concern

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