The Forward Expectations Parity States That

question 13

Multiple Choice

The forward expectations parity states that:

• A) any forward premium or discount is equal to the expected change in the exchange rate.
• B) any forward rate is equal to the expected change in the exchange rate.
• C) the forward premium or discount is equal to the expected change in the real exchange rates.
• D) the forward premium or discount is equal to the expected change in purchasing power parity.

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Definitions:

Emotional

Relating to feelings, moods, and emotional states, and the impact they have on behavior and thought processes.

Controversial

Marked by or capable of causing debate or disagreement among people.

Direct Approach

A straightforward method of communication or action that goes straight to the point, without any detours or evasion.

React Negatively

To respond adversely or unfavorably to a situation, comment, or action.