Leila Corp $\mu$ _t,
​
Where S_t Is the Spot Rate of the the Forecasts

Multiple Choice

Leila Corp. used the following regression model to determine if the forecasts over the last ten years were biased: ​
S_t = a₀ + a₁F_{t - 1} + $\mu$ _t,
​
Where S_t is the spot rate of the yen in year t and F_{t - 1} is the forward rate of the yen in year t - 1. Regression results reveal coefficients of a₀ = 0 and a₁ = .30. Thus, Leila Corp. has reason to believe that its past forecasts have ____ the realized spot rate.

A) overestimated
B) underestimated
C) correctly estimated
D) None of these are correct.