Question 17 Assume that you find that forward exchange rates of the Malaysian ringgit quoted in...
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Question 17 Assume that you find that forward exchange rates of the Malaysian ringgit quoted in US dollars F(t,$/MYR) is a biased predictors of future spot exchange rates S(t+1.$/MYR). In particular, find that E[Error(t+1)]-E[S(t+1).$/MRY)]- FLS/MRY)-2%*0. The expected error term must revert to 0% quickly because no rational investor will volunteer to buy a forward contract with a -2% expected return. True O False 3 pts O No enough information Question 17 Assume that you find that forward exchange rates of the Malaysian ringgit quoted in US dollars F(t,$/MYR) is a biased predictors of future spot exchange rates S(t+1.$/MYR). In particular, find that E[Error(t+1)]-E[S(t+1).$/MRY)]- FLS/MRY)-2%*0. The expected error term must revert to 0% quickly because no rational investor will volunteer to buy a forward contract with a -2% expected return. True O False 3 pts O No enough information
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Related Book For
Financial Reporting And Analysis
ISBN: 9781260247848
8th Edition
Authors: Lawrence Revsine, Daniel Collins, Bruce Johnson, Fred Mittelstaedt, Leonard Soffer
Posted Date:
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