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u are thinking to start an investment project that will involve ish flows denominated in a foreign currency. Before starting le project, you decide to
u are thinking to start an investment project that will involve ish flows denominated in a foreign currency. Before starting le project, you decide to forecast the exchange rate and see hether the project could be profitable or not. Which one of he following approaches makes more sense? Use the technical approach to get a first understanding of the exchange rate and start the project as soon as possible Use the technical approach to forecast the spot rate and the marketbased approach to forecast the forward rate Compute the volatility of the currency and, you find it is low, use the market-based approach Only collect data on inflation and interest rates and apply the fundamental approach If the foreign currency is very volatile, use more than one forecasting approach to see whether there is accordance between them about. how the exchange rate will change
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