Which forecasting technique uses a fundamental-based model with information that is thought to be important to changes in exchange rates?
A) Structural
B) Hedging
C) Atheoretical
D) Flow

Question

Quizplus · Accepted Answer

A fundamental-based model, which considers factors such as interest rates, inflation, and economic growth, is used in structural forecasting. This technique takes into account economic theories and relationships between different variables to predict changes in exchange rates. Hedging involves the use of financial instruments to reduce risks in currency transactions, while atheoretical forecasting does not rely on economic theories but instead uses statistical methods. Flow forecasting focuses on the actual flow of funds and transactions in international trade.

Which Forecasting Technique Uses a Fundamental-Based Model with Information That