Explain the random walk model for exchange rate forecasting, Financial Management

Assignment Help:

Explain the random walk model for exchange rate forecasting. Can it be consistent along with the technical analysis?

Answer:  The random walk model assumes that the current exchange rate will be the extremely best predictor of the future exchange rate. A suggestion of the model is that past history of the exchange rate is of no value in predicting future exchange rate. So the model is inconsistent with the technical analysis that tries to utilize past history in predicting the future exchange rate.


Related Discussions:- Explain the random walk model for exchange rate forecasting

Find the impact of price and trading volume, Purpose of research: The a...

Purpose of research: The aims of this research are to examine the effectiveness of speculation on efficiency of Petrochemical sector in Saudi Arabia financial market"TADAWUL".

Exchange rate or currency risk, A bond whose payments are made in for...

A bond whose payments are made in foreign currency has unknown cash flows in domestic currency. This is because the cash flows are dependent on the exchange rate

Explain continuous compounding benefit an investor, How does continuous com...

How does continuous compounding benefit an investor? The influence of increasing the number of compounding periods every year is to increase the future value of the investment. Th

Explain rate of the stock turnover, Q. Explain Rate of the stock turnover? ...

Q. Explain Rate of the stock turnover? Rate of the stock turnover: this is high degree of the inverse co relation between the quantum of the working capital requirement and the

Effect on exchange rates, Effect on Exchange Rates As we know, one of t...

Effect on Exchange Rates As we know, one of the most vital determinants of changes in relative exchange rates is the relative inflation rate. Assuming a free and open market, i

Financial system, Financial System: The economic development of a natio...

Financial System: The economic development of a nation is reflected by the progress of the various economic units, broadly classified into corporate sector, government and hous

Why business spend time, Why do businesses spend time, effort, and money to...

Why do businesses spend time, effort, and money to produce forecasts?  Explain. Businesses succeed or fail relies on how well organized they are to deal with the situations they

Statement of total comprehensive income for the year, At 31 July 2010 this ...

At 31 July 2010 this instrument meets the definition of a derivative: Small or no initial investment. Its value is dependent on an underlying economic item; exchange ra

Explain compound value concept, Q. Explain Compound Value Concept? The ...

Q. Explain Compound Value Concept? The Compound Value Concept is used to find out the FV of present money. It is the same as the concept of compound interest, wherein the inter

What do you mean by letter of credit, Q. What do you mean by Letter of Cred...

Q. What do you mean by Letter of Credit? A letter of credit is an arrangement whereby a bank helps its customer to obtain credit from its (customer's) suppliers. When a bank op

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd