TCQT CHAP 8

Which of the following forecasting techniques would best represent the use of today's forward exchange rate to forecast the future exchange rate?

• fundamental forecasting

• market-based forecasting

• technical forecasting.

• mixed forecasting

Which of the following forecasting techniques would best represent sole use of today's spot exchange rate of the euro to forecast the euro's future exchange rate?

• fundamental forecasting

• market-based forecasting

• technical forecasting.

• mixed forecasting

Which of the following forecasting techniques would best represent the use of relationships between economic factors and exchange rate movements to forecast the future exchange rate?

• fundamental forecasting

• market-based forecasting

• technical forecasting.

• mixed forecasting

Which of the following forecasting techniques would best represent the sole use of the pattern of historical currency values of the euro to predict the euro's future currency value?

• fundamental forecasting

• market-based forecasting

• technical forecasting.

• mixed forecasting

If a particular currency is consistently declining substantially over time, then a market-based forecast will usually have:

• underestimated the future exchange rates over time.

• overestimated the future exchange rates over time.

• forecasted future exchange rates accurately

• forecasted future exchange rates inaccurately but without any bias toward consistent underestimating or overestimating.

According to the text, the analysis of currencies forecasted with use of the forward rate suggests that:

• currencies exhibited about the same mean forecast errors as a percent of the realized value

• the Canadian dollar can be forecasted by U.S. firms with greater accuracy than other currencies

• the Swiss franc can be forecasted by U.S. firms with greater accuracy than other currencies

• none of the above

If it was determined that the movement of exchange rates was not related to previous exchange rate values, this implies that a ____ is not valuable for speculating on expected exchange rate movements.

• technical forecast technique

• fundamental forecast technique

• all of the above

• none of the above

Which of the following is true?

• Forecast errors cannot be negative

• Forecast errors are negative when the forecasted rate exceeds the realized rate.

• Absolute forecast errors are negative when the forecasted rate exceeds the realized rate.

• none of the above

Which of the following is true according to the text?

• Forecasts in recent years have been very accurate

• Use of the absolute forecast error as a percent of the realized value is a good measure to use in detecting a forecast bias

• Forecasting errors are smaller when focused on longer term periods

• none of the above

A fundamental forecast that uses multiple values of the influential factors is an example of:

• sensitivity analysis

• discriminant analysis

• technical analysis.

• factor analysis.