In an _____________ market,forward exchange rates will not be the best possible predictors of future spot exchange rates.

Question

Quizplus · Accepted Answer

An inefficient market refers to a market where information is not readily available or quickly incorporated into asset prices, thus making it difficult to predict future prices using past prices or other available information. In such a market, forward exchange rates might not be the best possible predictors of future spot exchange rates. Efficient markets, on the other hand, incorporate information rapidly into asset prices, making it easier to predict future prices using available information. Closed, regulated, and reciprocal markets do not necessarily affect the predictive power of forward exchange rates.

In an _____________ Market,forward Exchange Rates Will Not Be the Best