Author Question: Compare and contrast the two main techniques for forecasting exchange rates. What will be an ... (Read 149 times)

olgavictoria · **on:** Jul 7, 2018

Compare and contrast the two main techniques for forecasting exchange rates.

What will be an ideal response?

Question 2

To help speed up the process of getting approvals for local operations, a firm would most likely benefit from hiring ________.

A) home-country managers from the company's headquarters
B) managerial talent from the host country
C) recent college graduates trained in the home country
D) third-country expatriates with extensive experience in the field

perkiness · **Reply #1 on:** Jul 7, 2018

Answer to Question 1

Fundamental analysis uses statistical models based on fundamental economic indicators to forecast exchange rates. These models are often quite complex, with many variations reflecting different possible economic conditions. These models include economic variables such as inflation, interest rates, money supply, tax rates, and government spending. Such analyses also often consider a country's balance-of-payments situation and its tendency to intervene in markets to influence the value of its currency.
Another method of forecasting exchange rates is technical analysisa technique that uses charts of past trends in currency prices and other factors to forecast exchange rates. Using highly statistical models and charts of past data trends, analysts examine conditions that prevailed during changes in exchange rates, and they try to estimate the timing, magnitude, and direction of future changes. Many forecasters combine the techniques of both fundamental and technical analyses to arrive at potentially more accurate forecasts.

Answer to Question 2

B