Discuss the dangers of forecasting future spot exchange rates using methods based on trends.

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Global Investments

ISBN: 978-0321527707

6th edition

Authors: Bruno Solnik, Dennis McLeavey

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Question Posted: Mar 25, 2016 06:45 AM

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The most widely accepted theory of foreign exchange rate determination is purchasing power parity, yet it has proven to quit poor at forecasting future spot exchange rates. Why?
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Discuss the dangers of forecasting future spot exchange rates using methods based on trends.

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There is some evidence of positive serial correlation in exchange rate movements rea...View the full answer

Global Investments

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