A tracking signal greater than zero and a mean absolute deviation greater than zero imply that the forecast has:
A) no bias and no variability of forecast error.
B) a nonzero amount of bias and a nonzero amount of forecast error variability.
C) no bias and a nonzero amount of forecast error variability.
D) a nonzero amount of bias and no variability of forecast error.

Question

Quizplus · Accepted Answer

A tracking signal greater than zero indicates that there is bias in the forecast. On the other hand, a mean absolute deviation greater than zero shows that there is variability of forecast error. Therefore, the only option that fits both conditions is option B, which implies that there is both bias and variability of forecast error. Option A is incorrect as it indicates no variability of forecast error, which contradicts the condition of the mean absolute deviation being greater than zero. Option C is incorrect because it implies that there is variability of forecast error but no bias, which is not consistent with the tracking signal being greater than zero. Option D is also incorrect because it suggests that there is only bias and no variability of forecast error, which contradicts the condition of the mean absolute deviation being greater than zero.

A Tracking Signal Greater Than Zero and a Mean Absolute