Expectations theory and FMI: Difference between pages

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imported>Doug Williamson
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imported>Doug Williamson
(Create the page. Source: Bank of England's supervision of financial market infrastructures - Annual Report March 2014, p6: http://www.bankofengland.co.uk/publications/Pages/fmi/default.aspx)
 
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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.
''UK financial market regulation.''


Expectations theory also applies in the interest rate market, and indeed in any market where forward prices are quoted.
Financial Market Infrastructure.




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.


== See also ==
*[[Financial Market Infrastructure]]


== See also ==
[[Category:Cash_management]]
* [[Four way equivalence model]]
* [[Outturn]]
* [[Rational expectations]]
* [[Yield curve]]

Revision as of 13:01, 18 March 2014

UK financial market regulation.

Financial Market Infrastructure.


See also