According to the Expectations Theory of Exchange Rates,what Change Is

question 92

Multiple Choice

According to the expectations theory of exchange rates,what change is expected in the future spot exchange rate if the current spot rate is 8% lower than the forward exchange rate?

• A) Future spot rate is expected to increase by 8%.
• B) Future spot rate is expected to decrease by 8%.
• C) Future spot rate is expected to decrease by 4%.
• D) No change is expected in the future spot rate.

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Definitions:

Analyzed

The process of examining data or a financial statement in detail to extract insights or identify trends.

Effect

The impact or outcome that results from a specific cause or action, often analyzed in studies to understand causal relationships.

Ledger Accounts

Records that summarize the transactions related to a particular item over a period, creating a record of each financial transaction that takes place.

Transferred

The act of moving assets, funds, or rights from one account, location, or ownership to another.