Question
Forecasting based on the IFE The prevailing one-year risk-free interest rate in Malaysia is higher than in Australia and will continue to be higher over
Forecasting based on the IFE The prevailing one-year risk-free interest rate in Malaysia is higher than in Australia and will continue to be higher over time. Sycamore Co. believes the international Fisher effect (IFE) can be used to derive the best forecast of the ringgit's exchange rate movement over time. However, you believe that the prevailing spot rate is the best forecast of the future spot rate. Based on your opinion, will Sycamore Co. typically overestimate the future spot rate, underestimate the future spot rate, or create an unbiased forecast of the Malaysian ringgit?
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International financial management
Authors: Jeff Madura
12th edition
1133947832, 978-1305195011, 978-1133947837
