- CFA Exams
- CFA Level I Exam
- Study Session 4. Economics
- Reading 10. Currency Exchange Rates: Understanding Equilibrium Value
- Subject 3. A Long-Term Framework for Exchange Rates
CFA Practice Question
Which parity implies that the current forward exchange rate is an unbiased predictor of the future spot rate?
A. Covered interest rate parity.
B. Uncovered interest rate parity.
C. The international Fisher effect.
Explanation: In reality, however, forward exchange rates are poor indicators of future spot exchange rates.
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