According to the efficient market view,future exchange rates are most accurately forecasted by ________.
A) forward exchange rates
B) cross rate
C) interbank interest rates
D) buy rate

Question

Quizplus · Accepted Answer

According to the efficient market view, future exchange rates are already incorporated into the current market prices. Forward exchange rates are based on the expected future exchange rates and are determined by the market demand and supply of currencies. Therefore, forward exchange rates are considered the most accurate forecast of future exchange rates. Cross rates, interbank interest rates, and buy rates are not directly related to forecasting future exchange rates according to the efficient market view.

According to the Efficient Market View,future Exchange Rates Are Most