The Condition Stating That the Current Forward Rate Is an Unbiased

question 86

Multiple Choice

The condition stating that the current forward rate is an unbiased predictor of the future spot exchange rate is called:

• A)the unbiased forward rates condition.
• B)uncovered interest rate parity.
• C)the international Fisher effect.
• D)purchasing power parity.
• E)interest rate parity.

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Definitions:

Short-term Investments

Assets that are expected to be converted into cash, sold, or consumed within one year or one business cycle, whichever is longer.

Long-term Investments

Assets that a company intends to hold for more than one fiscal year, such as stocks, bonds, or real estate, with the expectation of generating long-term benefits.

Accrued Interest

Interest that has been earned but not yet paid or received in cash.

Semiannual Interest

Interest calculated or paid twice a year on loans, bonds, or savings accounts.