If the Forward Exchange Rate Is an Unbiased Predictor of Future

question 36

True/False

If the forward exchange rate is an unbiased predictor of future spot rates, then future spot rates will always be equal to current forward rates.

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Definitions:

Manufacture

The process of making goods on a large scale using labor and machines, typically within a factory setting.

Industry

A group of companies that are related based on their primary business activities.

Variable Costs

Costs that change in proportion to the level of goods or services that a business produces.

Profit-maximizing Output

The level of production at which a firm achieves the highest profit, where marginal revenue equals marginal cost.