If the exchange rate follows a random walk a the

86. If the exchange rate follows a random walk
A. The future exchange rate is unpredictable
B. The future exchange rate is expected to be the same as the current exchange rate, S
t
= E ( S
t +1
)
C. The best predictor of future exchange rates is the forward rate F
t
= E ( S
t +1
| I
t
)
D. b) and c)
c) is wrong because the forward rate model is distinct from the random walk model
87. One implication of the random walk hypothesis is
88. The random walk hypothesis suggests that:
the forward rate model is distinct from the random walk model. Tough question
89. With regard to fundamental forecasting versus technical forecasting of exchange rates
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Chapter 06 International Parity Relationships and Forecasting Foreign Exchange
90. Generating exchange rate forecasts with the fundamental approach involves
A. Looking at charts of the exchange rate and extrapolating the patterns into the future
B. Estimation of a structural model
C. Substituting the estimated values of the independent variables into the estimated structural
model to generate the forecast
D. b) and c)
91. Which of the following issues are difficulties for the fundamental approach to exchange rate
forecasting?