Explanation:

The linear trend model is: Rateₜ = 0.7837 – 0.0050t

• The data covers 2 years of monthly data, so total periods = 2 × 12 = 24 months
• t = 1 corresponds to the start of the 2-year period
• One year from now means we need to forecast for t = 24 + 12 = 36

Substitute t = 36 into the model: Rate₃₆ = 0.7837 – 0.0050 × 36 Rate₃₆ = 0.7837 – 0.18 Rate₃₆ = 0.6037

However, the question asks for the forecasted exchange rate one year from now, which would be t = 36. But let's verify:

Current time (end of 2-year period): t = 24 One year from now: t = 24 + 12 = 36

Rate₃₆ = 0.7837 – 0.0050 × 36 = 0.7837 – 0.18 = 0.6037

Wait, this gives 0.6037, which is option A. But let me double-check the calculation:

0.0050 × 36 = 0.18 0.7837 – 0.18 = 0.6037 ✓

Actually, the correct answer should be A (0.6037) based on this calculation. The model shows a declining trend, and forecasting 12 periods beyond the 24-month period gives 0.6037.