Instruments denominated in different currencies are perfect substitutes for one another.
Empirical studies of the efficient foreign exchange market hypothesis have yielded conflicting results. Nevertheless, a consensus is developing that rejects the efficient market hypothesis. It appears that the forward rate is not an unbiased predictor of the future spot rate and that it does pay to use resources to attempt to forecast exchange rates.
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Q46: The authors describe an application of uncovered
Q47: All that is required for a covered
Q48: If exchange markets were not efficient, it
Q49: The final component of the equation for
Q50: Empirical tests have yielded _ evidence about
Q52: Covered interest arbitrage moves the market _
Q53: The current U.S. dollar-yen spot rate is
Q54: Arbitragers applying Covered Interest Arbitrage drive the
Q55: Empirical studies show that the Fisher Effect
Q56: Some forecasters believe that foreign exchange markets
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