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Unbiased Expectations Hypothesis
(redirected from Expectations Theory)

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Unbiased expectations hypothesis
Theory that forward exchange rates are unbiased predictors of future spot rates. See Forward parity.

Unbiased Expectations Hypothesis
In foreign exchange, a theory that forward exchange rates for delivery at some future date are equal to the spot rates for that date. The hypothesis only functions in the absence of a risk premium. Critics contend that the unbiased expectations evidence shows that unbiased expectations do not occur in actual trading. It is also called an unbiased predictor.


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Financial factors, macroeconomic information and the expectations theory of the term structure of interest rates.
But I look back with pride at the first three projects that I initiated: one on youth labor markets organized by Dick Freeman and David Wise, one on capital formation headed by Ben Friedman, and one on the implications of rational expectations theory for macroeconomic policy organized by Stan Fischer.
Credit was available for all sensible approaches, although the highest marks would have been awarded to candidates who showed an understanding of expectations theory as it applies to options.
 
 
 
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