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Unbiased Predictor

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Unbiased predictor
A theory that spot prices at some future date will be equal to today's forward rates.

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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The Theoretical Price as an Unbiased Predictor of True Prices The relationship between futures prices and the expected future price of an asset has most often been investigated within the context of market rationality.
Therefore, today's tax rate is an unbiased predictor of future tax rates.
The forward rate, which is considered an unbiased predictor of the future spot rate by some scholars (Kohlhagen 1979 and Levich 1979), may also be used to forecast foreign exchange rates in lieu of either purchasing a commercial forecast or incurring the expense of forecasting in-house.
 
 
 
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