Unbiased predictor

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.
References in periodicals archive ?
Provided the movement of teachers in and out of a grade has not changed the makeup of students enrolled in that grade, this finding supports the conclusion that measured value-added of teachers is an unbiased predictor of future test-score gains, as there appears to be no other explanation for the resulting improvement in test scores.
The Theoretical Price as an Unbiased Predictor of True Prices
Thus, the price of an asset or futures contract at any moment should be an unbiased predictor of the price at a future moment.
The closing theoretical true futures price on the days of limit moves is an unbiased predictor of the open futures price on the following trading day.
It is conceivable that the actual closing price of the current day is an unbiased predictor of the open price of the following day, despite any limit moves.
In all other cases, the null hypothesis of an unbiased predictor of the opening price on the following day is rejected.
The unbiased hypothesis cannot be rejected only for the case of limit move days using the theoretical true futures prices as an unbiased predictor of the next trading day's open price.
Dubbed "mixed model equations (MMEs) that produce best linear unbiased predictors," the approach uses a disease-ranking system and matrix information to predict susceptibility of a plant species, based on how genetically similar it is to the targeted weed--Russian thistle, for example.
Corporate practitioner Galwey writes for senior undergraduates, postgraduate students and professionals, starting by explaining the need for more than one random-effect term when fitting a regression line or when designing an experiment, estimation of the variances of random-effect terms, interval estimates for fixed-effect terms in mixed models, best linear unbiased predictors in the estimation of random effects in mixed models, advanced mixed models for more elaborate data sets, the use of mixed models for the analysis of unbalanced experimental designed, going beyond mixed modeling and the reasons why the criterion for fitting mixed models is called the residual maximum likelihood.
An important question to ask of forecasts is whether they are unbiased predictors.
We found that futures market prices were unbiased predictors of target rate changes when evaluated at the usual five-percent level.
He points out that this result contradicts the rational expectations result that forward exchange rates should be unbiased predictors of future spot exchange rates.