- +1-530-264-8006
- info@tutorsglobe.com

Unbiased estimate of the future spot rate

Question 1) If the forward rate was expected to be an unbiased estimate of the future spot rate, and interest rate parity holds, then:

a) covered interest arbitrage is feasible.

b) the international Fisher effect (IFE) is supported.

c) the international Fisher effect (IFE) is refuted.

d) the average absolute error from forecasting would equal zero

Question 2) According to the international Fisher effect, if U.S. investors expect a 5% rate of domestic inflation over one year, and a 2% rate of inflation in European countries that use the euro, and require a 3% real return on investments over one year, the nominal interest rate on one-year U.S. Treasury securities would be:

a) 2%.

b) 3%.

c) -2%.

d) 5%.

e) 8%.

Now Priced at $20 (50% Discount)

Recommended **(92%)**

18,76,764

Questions

Asked

21,311

Experts

9,67,568

Questions

Answered

Start Excelling in your courses, Ask an Expert and get answers for your homework and assignments!!

Submit Assignment
## Q : Value of the czech republic currency

Would it consider the same factors when determining how the value of the Czech Republic's currency (the koruna) may change?