The Discrepancy Between the Forward Rate and the Expected Future

question 10

Multiple Choice

The discrepancy between the forward rate and the expected future spot rate due to the presence of a risk premium makes

• A) the forward rate a biased predictor of the future spot rate.
• B) the forward rate an unbiased predictor of the future spot rate.
• C) the foreign exchange market inefficient.
• D) Both A and C.

---

Definitions:

Public Water Supply System

Infrastructure and facilities used to collect, treat, and distribute potable water to the public.

Safe Drinking Water Act

A federal law in the United States aiming to ensure the quality of Americans' drinking water by setting standards for contaminants and overseeing states, localities, and water suppliers who implement these standards.

FIFRA

The Federal Insecticide, Fungicide, and Rodenticide Act, which oversees the registration, distribution, sale, and use of pesticides in the U.S.

Unreasonable Risks

Unreasonable risks involve situations or actions that pose a high likelihood of harm or loss that are not justifiable, especially in the context of product safety or professional duties.