Answer-first summary for fast verification
Answer: Model 3
## Explanation **Model 3 is the most accurate** because it has the **lowest Root Mean Squared Error (RMSE)** of 1.05. **Key Points:** - **RMSE** measures forecasting accuracy - lower values indicate better performance - Model 1: RMSE = 3.20 (worst performance) - Model 2: RMSE = 1.55 (intermediate performance) - Model 3: RMSE = 1.05 (best performance) **Interpretation:** - The model with the smallest forecasting errors (lowest RMSE) provides the most accurate predictions - The increasing order of autoregression (AR(1) → AR(2) → AR(3)) suggests that higher-order models may capture more complex patterns in the data - However, the primary selection criterion should be the RMSE value, not the model complexity alone Therefore, Model 3 is the most accurate forecasting model based on the lowest RMSE.
Author: LeetQuiz Editorial Team
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An analyst compares the out-of-sample forecasting performance of three autoregressive models on the same dataset and summarizes the following information:
| Metric | Model 1 | Model 2 | Model 3 |
|---|---|---|---|
| Root mean squared error | 3.20 | 1.55 | 1.05 |
| Order of autoregression | 1 | 2 | 3 |
Which of the models is most accurate?
A
Model 1
B
Model 2
C
Model 3
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