Products

Holooly Rewards

We are determined to provide the latest solutions related to all subjects FREE of charge!

Please sign up to our reward program to support us in return and take advantage of the incredible listed offers.

Enjoy Limited offers, deals & Discounts by signing up to Holooly Rewards Program

Holooly Ads. Manager

Advertise your business, and reach millions of students around the world.

Holooly Tables

All the data tables that you may search for.

Holooly Arabia

For Arabic Users, find a teacher/tutor in your City or country in the Middle East.

Holooly Sources

Find the Source, Textbook, Solution Manual that you are looking for in 1 click.

Holooly Help Desk

Need Help? We got you covered.

Chapter 9

Q. 9.ST.2

Consider the following information:

Currency 90-Day Forward Rate Spot Rate That Occurred 90 Days Later
Canadian dollar $.80 $.82
Japanese yen $.012 $.011

Assuming the forward rate was used to forecast the future spot rate, determine whether the Canadian dollar or the Japanese yen was forecasted with more accuracy, based on the absolute forecast error as a percentage of the realized value.

Step-by-Step

Verified Solution

Canadian dollar \frac{| \$ .80- \$ .82|}{ \$ .82} = 2.44%

Japanese yen \frac{|\$ .012-\$ .011|}{\$ .011} = 9.09%

The forecast error was larger for the Japanese yen.