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1. The fact that the forward rate is an unbiased predictor of future spot rate means that:

a) the forward rate will, on average, overestimate and underestimate the actual future spot rate by equal frequency and degree

b) the forward rate will, on average, overestimate the actual future spot rate by 75% and underestimate the actual future spot rate by 5%

c) the forward rate will be equal to the actual future spot rate

d) the forward rate and the actual future spot rate are completely unrelated to one another

2. The__________ rate compensates investors or savers for postponing the current consumption of their money. In other words, this rate represents the compensation received by the saver for letting other people (such as a bank) use his money.

a) Excess

b) Real

c) Nominal

d) Inflation

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M92706768

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