Assume That Foreign Exchange Rates Are Totally Unpredictable, as Some

question 3

Essay

Assume that foreign exchange rates are totally unpredictable, as some theories and empirical studies claim, so that the best prediction of the future spot rate is the current spot rate.
a. Back in 1982, would you have suggested investing in U.S. dollar bills or in German bills?
b. What about in 1992?
c. What about in 1997?
(Look at Exhibit 3.1 of the fifth edition, knowing that inflation rates were similar in the two countries.)

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Definitions:

Popliteal Ligament

A strong, fibrous band of tissue connecting the femur to the tibia at the knee, crucial for knee joint stability.

Posterior Knee

The backside of the knee joint, an area that includes tendons, ligaments, and bursae important for knee movement and stability.

Annular Ligament

A fibrous band of tissue that encircles and stabilizes a joint.

Radial Head

The proximal end of the radius bone in the forearm, near the elbow, that allows for arm rotation.