Which One of the Following States That the Current Forward

question 9

Multiple Choice

Which one of the following states that the current forward rate is an unbiased predictor of the future spot exchange rate?

• A)unbiased forward rates
• B)uncovered interest rate parity
• C)international Fisher effect
• D)purchasing power parity
• E)interest rate parity

---

Definitions:

Asymmetric Information

A circumstance in which one party involved in an exchange has more or better information compared to the other party.

Hidden Action

A concept in economics and game theory where one party's action is not observed or cannot be monitored by the other involved party.

Hidden Characteristic

In economics and contract theory, a hidden characteristic refers to information about a product, service, or individual that is not known beforehand by one of the parties in a transaction, potentially leading to problems like adverse selection.

Asymmetric Information

A situation where one party in a transaction has more or superior information compared to another.