Multiple Choice
If the exchange rate follows a random walk
A) the future exchange rate is unpredictable.
B) the future exchange rate is expected to be the same as the current exchange rate, St = E(St + 1) .
C) the best predictor of future exchange rates is the forward rate Ft = E(St + 1|It) .
D) both b and c
Correct Answer:
Verified
Correct Answer:
Verified
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