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Unbiased Expectations Hypothesis |
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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. How to thank TFD for its existence? Tell a friend about us, add a link to this page, add the site to iGoogle, or visit webmaster's page for free fun content. |
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