When measuring forecast performance of different currencies, it is oFten useful to adjust for their relative sizes. Thus, percentages, rather than nominal amounts, are oFten used to compute forecast errors.

Question

Quizplus · Accepted Answer

This statement is true. Adjusting for the relative sizes of currencies by using percentages instead of nominal amounts helps to make comparisons of forecast performance more meaningful. This is because nominal amounts do not take into account the fact that some currencies may be worth more than others, and therefore a forecast error may have a different impact depending on the currency. Using percentages allows for a standardized comparison of forecast performance across different currencies.

When Measuring Forecast Performance of Different Currencies, It Is OFten