What is the purpose of calculating the standard error of forecast?

Calculating the standard error of forecast serves the purpose of estimating the variability of the forecast predictions. The standard error quantifies how much the forecasted values are expected to fluctuate due to sampling variability and model uncertainty. It provides a measure of the precision of the predictions, helping analysts understand the level of confidence they can have in their forecasts.

By calculating the standard error, one can also assess the reliability of the forecasts; a smaller standard error indicates more precise predictions, while a larger standard error suggests greater variability and less reliability. This is crucial for decision-making in finance and statistics, where understanding risk and uncertainty is fundamental.

The other options, while related to statistical analysis, do not directly address the specific aim of the standard error. Identifying an average, determining a range, or evaluating the mean are distinct aspects of statistical analysis not tied to the purpose of measuring forecast variability.