Task 1

Download monthly prices for a commodity or shipping freight rate for a single shipping route over the past 20 years.

1 Use the first 15 years of the time series and estimate at least 3 different models, perform diagnostic tests, and present the final estimation result and the diagnostics in each case.

2 Use appropriate technique to compute forecast values for 1 , 2 and 3-months ahead, over the last 5 years of the sample with the 3 models you have estimated in part 1.

3 Use appropriate statistics to evaluate the forecasting performance of each model and compare forecasting performance of models for 1, 2, 3-step ahead forecast,

4 Choose the best model and prepare a short report including forecast values on how freight rates are going to behave over the next 12 month, March 2012 to March 2013.