Suppose that the forward premium equals the conditional expectation of the future rate of appreciation of the

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Suppose that the forward premium equals the conditional expectation of the future rate of appreciation of the foreign currency relative to the domestic currency. If we form the average realized rate of appreciation from a large sample of data and compare it to the average forward premium, what should be true?

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International Financial Management

ISBN: 978-0132162760

2nd edition

Authors: Geert Bekaert, Robert J. Hodrick

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