If the Forward Rate Is Expected to Be an Unbiased

question 13

Multiple Choice

If the forward rate is expected to be an unbiased estimate of the future spot rate, and interest rate parity holds, then:​

• A) ​covered interest arbitrage is feasible.
• B) ​the international Fisher effect (IFE) is supported.
• C) ​the international Fisher effect (IFE) is refuted.
• D) ​the average absolute error from forecasting would equal zero.

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