Firms That Believe the Forward Rate Is an Unbiased Predictor

question 2

True/False

Firms that believe the forward rate is an unbiased predictor of the future spot rate will prefer borrowing the foreign currency.

---

Definitions:

Trait Theory

A theory in psychology that posits personality is composed of a number of broad traits, or characteristic ways of behaving.

Psychodynamic Theory

A theory in psychology that emphasizes systematic study of the psychological forces that underlie human behavior, feelings, and emotions and how they might relate to early experience.

Locus of Control

A psychological concept that refers to how strongly people believe they have control over the situations and experiences that affect their lives.

Reticular Activating System

A network of neurons located in the brainstem that plays a crucial role in controlling arousal and alertness.