Question

In: Finance

In accordance with the unbiased forward rate condition in determining the exchange rate, the current forward...

In accordance with the unbiased forward rate condition in determining the exchange rate, the current forward rate can be used as a ____________.

Multiple Choice

  • condition where the spot rate is expected to remain constant over a period of time.

  • condition where a future spot rate is equal to the current spot rate.

  • predictor of the future spot rate at the equivalent point in time.

  • relationship between the future spot rates of two currencies at an equivalent point in time.

  • guarantee of a future spot rate at one point in time.

Solutions

Expert Solution

Answer: The third option is correct.
The current forward rate can be used as a predictor of the future spot rate at the equivalent point in time.

jeff jeffy answered 2 years ago
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