CFA Practice Question

There are 253 practice questions for this study session.

CFA Practice Question

Real exchange rate movements are determined by a few factors: the long run equilibrium level, nominal interest rate spread, expected inflation differential and risk premium. Which one(s) is (are) directly observable?
Correct Answer: Nominal interest rate spread.

User Contributed Comments 2

User Comment
danubian Expected inflation differential as well, no? There are inflation-indexed bonds and swaps which serve as proxies for inflation expectations
davidt876 the fact that you can only observe it through proxies would mean that it's indirectly observable
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