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Unlike plays and poems, scientific theories are not judged by how pleasing they are. Instead, a theory must be backed by empirical evidence if it is to be taken seriously. Integrate this information from Chapter 2 with the critical thinking guideline, "Avoid Emotional Reasoning," that you studied in Chapter 1.
Dividends
Payments made by a corporation to its shareholders, usually as a distribution of profits.
Unbiased Forward Rate
An estimate of future spot interest rates implied by current interest rates, under the assumption that the forward rates are an unbiased predictor of future spot rates.
Future Spot Rate
The anticipated price of an asset at a future date in a spot transaction, which involves the immediate settlement of the transaction.
Spot Rate
The present market value at which a specific currency can be purchased or exchanged for instant delivery.
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