PHFO Quantitative Analysis For Business Pre-Assessment Practice Exam

What does MAPE stand for?

Mean Absolute Percentage Error Mean Absolute Predictive Error Median Absolute Percentage Error Mean Percentage Absolute Error

Correct Answer:

Mean Absolute Percentage Error

Explanation:

MAPE measures forecast accuracy by averaging the absolute percentage errors between actual values and forecasts. The “mean” shows we average across all observations, “absolute” means we use the magnitude of errors (no cancellation from signs), and “percentage” expresses those errors relative to the actual values, giving a scale-free measure. The standard name for this metric is Mean Absolute Percentage Error. The other terms aren’t standard: one uses a median instead of a mean, another misorders the words, and the first option uses an uncommon phrasing. The familiar formula is MAPE = (1/n) Σ |(Actual − Forecast) / Actual| × 100%.

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