Quarterly returns were forecasted for a mutual fund comprised of technology stocks.The forecast errors for the last six quarters are as follows: -0.47, 1.12, -0.85, 1.27, 0.07, and -0.05.The MSE based on these forecast errors is ________________________ .

Question

Quizplus · Accepted Answer

The Mean Squared Error (MSE) is calculated by squaring each forecast error, summing those squares, and then dividing by the number of errors. Here, MSE = [(-0.47)^2 + (1.12)^2 + (-0.85)^2 + (1.27)^2 + (0.07)^2 + (-0.05)^2] / 6 = (0.2209 + 1.2544 + 0.7225 + 1.6129 + 0.0049 + 0.0025) / 6 = 3.8181 / 6 = 0.63635, which rounds to 0.64.

Quarterly Returns Were Forecasted for a Mutual Fund Comprised of Technology