Some Forecasters Believe That Foreign Exchange Markets for the Major

question 53

Essay

Some forecasters believe that foreign exchange markets for the major floating currencies are "efficient" and forward exchange rates are unbiased predictors of future spot exchange rates. Explain the rationale of this statement including the assumptions made, the meaning of "efficient" and "unbiased," and the empirical evidence.

---

Definitions:

Missing Value

A data point or entry that is not recorded or absent in a dataset.

Promissory Note

A signed document containing a written promise to pay a stated sum to a specified person at a specified date or on demand.

Missing Value

The unavailability or lack of specific information that is expected to be in a dataset, record, or analytical equation.

Promissory Note

A legal document in which the writer promises to pay a specified sum of money to a designated party at a future date or on demand.