Question
Which of the following statements is TRUE? (I) In the long-horizon regression of Mark (1995), if the foreign currency is overvalued, then we should expect
Which of the following statements is TRUE? (I) In the long-horizon regression of Mark (1995), if the foreign currency is overvalued, then we should expect positive changes in the future exchange rate return. (II) In the long-horizon regression of Mark (1995), if the current exchange rate falls below its fundamental value, then we should expect positive changes in the future exchange rate return. (III) In the long-horizon regression of Mark (1995), if the current exchange rate is above its fundamental value, then we should expect positive changes in the future exchange rate return. (IV) In the long-horizon regression of Mark (1995), the current exchange rate is always equal to its fundamental value.
(I) and (IV) only
(I) only
(II) only
(I), (III) and (IV) only
(II) and (III) only
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