Unbiased Forward Rates (UFR) Can Best Be Defined As

question 257

Multiple Choice

Unbiased Forward Rates (UFR) can best be defined as:

• A) The condition stating that the interest rate differential between two countries is equal to the difference between the forward exchange rate and the spot exchange rate.
• B) The condition stating that the current forward rate is an unbiased predictor of the future exchange rate.
• C) The condition stating that the expected percentage change in the exchange rate is equal to the difference in interest rates.
• D) The theory that real interest rates are equal across countries.
• E) The risk related to having international operations in a region where currency values vary.