Exam 9: Forecasting Exchange Rates

Which of the following forecasting techniques would best represent the use of relationships between economic factors and exchange rate movements to forecast the future exchange rate

Which of the following forecasting techniques would best represent the sole use of the pattern of historical currency values of the euro to predict the euro's future currency value

Severus Co.has to pay 5 million Canadian dollars for supplies it recently received from Canada.Today,the Canadian dollar has appreciated by 2 percent against the U.S.dollar.Severus has determined that whenever the Canadian dollar appreciates against the U.S.dollar by more than 1 percent,it experiences a reversal of 40 percent on the following day.Based on this information,the Canadian dollar is expected to __________ tomorrow,and Severus would prefer to make payment __________.

If the foreign exchange market is ________ efficient,then historical and current exchange rate information is not useful for forecasting exchange rate movements.

Research indicates that currency forecasting services almost always outperform forecasts based on the forward rate.

Foreign exchange markets are generally found to be at least ___________ efficient.

Foreign exchange markets appear to be strong-form efficient.

The absolute forecast error of a currency is _________,on average,in periods when the currency is more __________.

If both interest rate parity and the international Fisher effect hold,then between the forward rate and the spot rate,the _________ rate should provide more accurate forecasts for currencies in _____-inflation countries.

If the forward rate was expected to be an unbiased estimate of the future spot rate,and interest rate parity holds,then:

When the value from the prior period of an influential factor affects the forecast in the future period,this is an example of a:

The most sophisticated forecasting techniques provide consistently accurate forecasts.

The U.S.inflation rate is expected to be 4 percent over the next year,while the European inflation rate is expected to be 3 percent.The current spot rate of the euro is $1.03.Using purchasing power parity,the expected spot rate at the end of one year is $________.

If a particular currency is consistently declining substantially over time,then a marketbased forecast will usually have:

Which of the following forecasting techniques would best represent the use of today's forward exchange rate to forecast the future exchange rate

If an MNC invests excess cash in a foreign county,it would like the foreign currency to _________;if an MNC issues bonds denominated in a foreign currency,it would like the foreign currency to __________.

Which of the following is not a limitation of fundamental forecasting

A fundamental forecast that uses multiple values of the influential factors is an example of:

Assume a forecasting model uses inflation differentials and interest rate differentials to forecast the exchange rate.  Assume the regression coefficient of the interest rate differential variable is .5,and the coefficient of the inflation differential variable is.4.  Which of the following is true

Silicon Co.has forecasted the Canadian dollar for the most recent period to be $0.73.The realized value of the Canadian dollar in the most recent period was $0.80.Thus,the absolute forecast error as a percentage of the realized value was ______%.