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Suppose you need to forecast the value of the Brazilian real because you are considering an investment denominated in Brazil. Complete the following table with
Suppose you need to forecast the value of the Brazilian real because you are considering an investment denominated in Brazil. Complete the following table with the conclusions drawn from fundamental forecasting and market-based forecasting techniques.
Factors Considered | Situation | Forecast | |
Technical Forecast | Recent movement in Brazilian real | The Brazilian real value declined below a specific threshold level in the last few weeks. | The Brazilian reals value will continue to fall now that it is beyond the threshold level. |
Fundamental Forecast | Economic growth, inflation, interest rates | Brazils interest rates are high, and inflation should remain low |
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Market-Based Forecast | Spot rate, forward rate | The Brazilian reals forward rate exhibits a significant discount, which is attributed to Brazils relatively high interest rates. |
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