What is the expected percentage change in the value of the foreign currency (e) if you combine all three techniques, which are equally weighted? Method Technical forecasting Fundamental forecasting Market-based forecasting 0.3% 4.6% O 4.7% O 2.0% Forecasted e 2% 8%

What is the expected percentage change in the value of the foreign currency (e) if you combine all three techniques, which are equally weighted? Method Technical forecasting Fundamental forecasting Market-based forecasting 0.3% 4.6% O 4.7% O 2.0% Forecasted e 2% 8%

International Financial Management

14th Edition

ISBN:9780357130698

Author:Madura

Publisher:Madura

Chapter9: Forecasting Exchange Rates

Section: Chapter Questions

Problem 5BIC

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Concept explainers

Exchange Rate Risk

It is the possibility that the value of a currency will fluctuate in the future. In the wake of globalization, business establishments have increasingly ventured into international markets. The volume of international trade has prospered excellently in the near past and is expected to be more affluent in the future. The use of exchange-traded derivative financial instruments has been multi-folded to provide for the requirements of various MNCs and offshore potential investors. Most banks and financial institutions have helped integrate the global economies. Our Government has introduced some bold and extreme measures to fulfil the purpose behind the fiscal, industrial, and monetary policies. The enactment of GST is a huge step towards streamlining the taxation system of the country. Owing to Covid-19, this aspect of corporate risk management has become critical.

Question

What is the expected percentage change in the value of the foreign currency (e) if you combine all
three techniques, which are equally weighted?
Method
Technical forecasting
Fundamental forecasting
Market-based forecasting
O 0.3%
O 4.6%
O 4.7%
2.0%
Forecasted e
2%
-4%
8%

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