Assume that foreign exchange markets were found to be weak-form efficient. What does this suggest about utilizing technical analysis to speculate in euros? Technical analysis -Select- be able to achieve excess profits if foreign exchange markets are weak-form efficient. If MNCs believe that foreign exchange markets are semistrong-form efficient, why would they develop their own forecasts of future exchange rates? That is, why wouldn't they simply use today's quoted rates as indicators about future rates? After all, today's quoted rates should reflect all relevant information. 1. Today's rates provide only short-term forecasts of future exchange rates while MNCs may desire to assess long-term forecasts. II. Today's rates do not provide information about the range of possible outcomes while MNCS may desire to assess this information. III. Today's rates provide information only about the currencies whose exchange rates are pegged while MNCS may desire to assess forecasts for currencies whose exchange rates fluctuate continuously. -Select-
Assume that foreign exchange markets were found to be weak-form efficient. What does this suggest about utilizing technical analysis to speculate in euros? Technical analysis -Select- be able to achieve excess profits if foreign exchange markets are weak-form efficient. If MNCs believe that foreign exchange markets are semistrong-form efficient, why would they develop their own forecasts of future exchange rates? That is, why wouldn't they simply use today's quoted rates as indicators about future rates? After all, today's quoted rates should reflect all relevant information. 1. Today's rates provide only short-term forecasts of future exchange rates while MNCs may desire to assess long-term forecasts. II. Today's rates do not provide information about the range of possible outcomes while MNCS may desire to assess this information. III. Today's rates provide information only about the currencies whose exchange rates are pegged while MNCS may desire to assess forecasts for currencies whose exchange rates fluctuate continuously. -Select-
Chapter9: Forecasting Exchange Rates
Section: Chapter Questions
Problem 11QA
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Transcribed Image Text:Assume that foreign exchange markets were found to be weak-form efficient. What does this suggest about utilizing technical analysis
to speculate in euros?
Technical analysis -Select- be able to achieve excess profits if foreign exchange markets are weak-form efficient.
If MNCs believe that foreign exchange markets are semistrong-form efficient, why would they develop their own forecasts of future
exchange rates? That is, why wouldn't they simply use today's quoted rates as indicators about future rates? After all, today's quoted
rates should reflect all relevant information.
1. Today's rates provide only short-term forecasts of future exchange rates while MNCs may desire to assess long-term forecasts.
II. Today's rates do not provide information about the range of possible outcomes while MNCS may desire to assess this information.
III. Today's rates provide information only about the currencies whose exchange rates are pegged while MNCS may desire to assess
forecasts for currencies whose exchange rates fluctuate continuously.
-Select-
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