The consumer loan department at Central Union bank and Trust wants to develop a forecasting model to help determine its potential loan application volume for the coming year. Because adjustable-rate home mortgages are based on government long-term treasury not rates, the department collected the following data for 3- t 5 year Treasury note interest rate for the past 24 years
Year Rate Year Rate Year Rate
|
1
|
5.77
|
9
|
9.71
|
17
|
7.68
|
|
2
|
5.85
|
10
|
11.55
|
18
|
8.26
|
|
3
|
6.92
|
11
|
14.44
|
19
|
8.55
|
|
4
|
7.82
|
12
|
12.92
|
20
|
8.26
|
|
5
|
7.49
|
13
|
10.45
|
21
|
6.80
|
|
6
|
6.67
|
14
|
11.89
|
22
|
6.12
|
|
7
|
6.69
|
15
|
9.64
|
23
|
5.48
|
|
8
|
8.29
|
16
|
7.06
|
24
|
6.09
|
Develop an appropriate forecast model for the bank to use to forecast Treasury note rates in the future and indicate how accurate it appears to be compared to historical data.