Which of the Following Would a Follower of the Inefficient

question 101

Multiple Choice

Which of the following would a follower of the inefficient market school of thought agree with?

• A) Companies would be better off investing in foreign exchange forecasting services.
• B) Forward exchange rates do the best possible job of forecasting future spot exchange rates.
• C) Companies can optimize their foreign exchange transactions by using forward markets.
• D) Forward rates reflect all available information about likely future changes in exchange rates.

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Definitions:

Demand Curve

A graphical representation showing the relationship between the price of a good and the quantity of the good demanded by consumers.

Perfectly Inelastic

A market condition where the quantity demanded or supplied does not change regardless of a price change.

Midpoint Method

A technique used to calculate the percentage change between two values, offering a more precise method than simple percentage calculations.

Price Elasticity

A measure of how much the quantity demanded of a good responds to a change in the price of that good, often used to understand the sensitivity of demand in relation to price changes.