If the Forward Rate Is an Unbiased Predictor of the Expected

question 56

Multiple Choice

If the forward rate is an unbiased predictor of the expected spot rate, which of the following is NOT true?

• A) The expected value of the future spot rate at time 2 equals the present forward rate for time 2 delivery, available now.
• B) The distribution of possible actual spot rates in the future is centered on the forward rate.
• C) The future spot rate will actually be equal to what the forward rate predicts.
• D) All of the above are true.

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Definitions:

Universal Theories

Theories or models that are applied globally, asserting that certain principles or explanations are valid across different contexts and cultures.

Contingency Theories

Theories suggesting that the effectiveness of leadership depends on the context or situation at hand, including the leader's characteristics and the conditions of the environment.

Dyadic Explanations

An analysis or discussion that involves two participants, often focusing on how their individual actions or perspectives relate to each other.

Assumptions

Beliefs or ideas taken for granted without proof, often serving as the foundation for decision-making and action.