Expectations theory: Difference between revisions
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imported>Doug Williamson (Add link.) |
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* [[Fisher Effect]] | * [[Fisher Effect]] | ||
* [[Four way equivalence model]] | * [[Four way equivalence model]] | ||
* [[Forward rate]] | |||
* [[Interest rate parity]] | * [[Interest rate parity]] | ||
* [[International Fisher Effect]] | * [[International Fisher Effect]] | ||
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* [[Purchasing power parity]] | * [[Purchasing power parity]] | ||
* [[Rational expectations]] | * [[Rational expectations]] | ||
* [[Spot rate]] | |||
* [[Yield curve]] | * [[Yield curve]] | ||
[[Category:Manage_risks]] | |||
[[Category:The_business_context]] | [[Category:The_business_context]] | ||
Revision as of 05:30, 6 November 2023
Expectations theory states that the best measure of the market's average expectation of the outturn spot foreign exchange rate at a given future date is the current market forward rate for the same maturity.
Expectations theory also applies in the interest rate market, and indeed in any market where forward prices are quoted.
So for example in the interest rate market, expectations theory suggests that the current market forward interest rate is the best measure of the average market expectation of the outturn spot interest rate at the given future date.
