Which of the Following Positions Is Adopted by the Inefficient

question 30

Multiple Choice

Which of the following positions is adopted by the inefficient market school of thought toward exchange rate forecasting?

• A)Forward exchange rates are the best possible predictors of future spot exchange rates.
• B)Forward exchange rates represent market participants' collective predictions of likely spot exchange rates.
• C)Companies cannot beat the markets because forward rates reflect all available information about likely future changes in exchange rates.
• D)Investing in forecasting services can improve the foreign exchange market's estimate of future exchange rates.
• E)The foreign exchange market is efficient at setting forward rates,which are unbiased predictors of future spot rates.

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Definitions:

Sporadically

Occurring at irregular intervals or only in a few places; scattered or isolated.

Classical Conditioning

A learning process that occurs when two stimuli are repeatedly paired; a response that is at first elicited by the second stimulus is eventually elicited by the first stimulus alone.

Stimulus Generalization

The tendency for the conditioned stimulus to evoke similar responses after the response has been conditioned.

Conditioned Stimulus

A previously neutral stimulus that, after becoming associated with an unconditioned stimulus, evokes a conditioned response.