Ask Question, Ask an Expert

+1-415-315-9853

info@mywordsolution.com

Ask Statistics and Probability Expert

The accuracy from forecasting with the spot rate will be better. The forward rate is higher than the spot rate (it has a premium) when the interest rate is lower. So if the forward rate is used as a forecast, it would suggest that a currency with the lower interest rate will appreciate (in accordance with the international Fisher effect). However, since money is assumed to flow where interest rates are higher, this implies that the spot rate will rise when a currency has a relatively high interest rate.

This relationship is in contrast to the IFE. Thus, a forward rate will suggest depreciation of the currencies that should appreciate (and vice versa) based on the information in the question. The spot rate as a forecast reflects a forecast of no change in the exchange rate. The forecast of no change in a currency value (when the spot rate is used as the forecast) is better than a forecast of depreciation for a currency that appreciates. The spot rate forecast results in a smaller mean absolute forecast error

Statistics and Probability, Statistics

  • Category:- Statistics and Probability
  • Reference No.:- M91767079

Have any Question? 


Related Questions in Statistics and Probability

Suppose that the number of men equals the number of women

Suppose that the number of men equals the number of women, and that Vera is last on the preference list of every man. Prove that under every stable matching, Vera is matched to the same man. Who is the unlucky guy?

1 what are the most important threats to validity that

1. What are the most important threats to validity that occur in quasi experimental research designs when the research is conducted over a period of time? What techniques can be used to minimize these potential interpret ...

A shipment of 8 computers contains 2 with defects find the

A shipment of 8 computers contains 2 with defects. find the probability that a sample of size 4, drawn from the 8, will not contain a defective computer. What is the probability that a sample of 4 of the 8 computers will ...

To test the model you will make 5 trades using 5 different

To test the model, you will make 5 trades using 5 different sets of data. You may define the parameters of the put call parity or use the following assumption for the parameters: Interest rate is 5%Transaction costs for ...

A consumer psychologist asked to test a claim by a swimming

A consumer psychologist asked to test a claim by a swimming school that its instructors could teach the average seven-year-old to swim across an Olympic-sized pool in less than 2 minutes. The psychologist arranged for ei ...

A student scored 81 on a chemistry test and 75 on a history

A student scored 81 on a chemistry test and 75 on a history test. For the chemistry test, the mean was 70 and the standard deviation was 20. For the history test, the mean was 65 and the standard deviation was 8. Did the ...

What is the difference between the standard deviation

What is the difference between the standard deviation, standard error of the mean, and standard error of the estimate? Discuss and offer examples.

This exercise generalizes aumanns agreement theorem to a

This exercise generalizes Aumann's Agreement Theorem to a set of players of arbitrary finite size. Given an Aumann model of incomplete information with beliefs (N, Y, (Fi) i ∈N  , s, P) with n players, suppose that for e ...

A simple random sample of 120 men results in a mean of 80

A simple random sample of 120 men results in a mean of 80 beats per minute, and a standard deviation of 11 beats per minute. Based on the sample results, the researcher concludes that the pulse rates of men have a standa ...

Three individuals are seated in a room each one of them is

Three individuals are seated in a room. Each one of them is wearing a hat, which may be either red or white. Each of them sees the hats worn by the others, but cannot see his own hat (and in particular does not know its ...

  • 4,153,160 Questions Asked
  • 13,132 Experts
  • 2,558,936 Questions Answered

Ask Experts for help!!

Looking for Assignment Help?

Start excelling in your Courses, Get help with Assignment

Write us your full requirement for evaluation and you will receive response within 20 minutes turnaround time.

Ask Now Help with Problems, Get a Best Answer

WalMart Identification of theory and critical discussion

Drawing on the prescribed text and/or relevant academic literature, produce a paper which discusses the nature of group

Section onea in an atwood machine suppose two objects of

SECTION ONE (a) In an Atwood Machine, suppose two objects of unequal mass are hung vertically over a frictionless

Part 1you work in hr for a company that operates a factory

Part 1: You work in HR for a company that operates a factory manufacturing fiberglass. There are several hundred empl

Details on advanced accounting paperthis paper is intended

DETAILS ON ADVANCED ACCOUNTING PAPER This paper is intended for students to apply the theoretical knowledge around ac

Create a provider database and related reports and queries

Create a provider database and related reports and queries to capture contact information for potential PC component pro