If the Exchange Rate Follows a Random Walk

question 81

Multiple Choice

If the exchange rate follows a random walk

• A)the future exchange rate is unpredictable.
• B)the future exchange rate is expected to be the same as the current exchange rate, S_t = E(S_t+1).
• C)the best predictor of future exchange rates is the forward rate F_t = E(S_t+1|I_t).
• D)both b) and c)

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Definitions:

Structural Holes

Gaps between different social networks or groups that, when bridged by individuals acting as brokers, can facilitate access to information and resources and spur innovation.

Contacts

Connections or relationships with other people, often valued for the exchange of information, opportunities, or resources they can provide.

Passive Resistance

A form of non-violent opposition or deliberate refusal to comply with certain laws, demands, or commands of authority figures.

Non-compliance

Failure or refusal to act in accordance with a set of rules, standards, or laws.