Expectations theory and Microprudential: Difference between pages

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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.
''Bank regulation''.  


Expectations theory also applies in the interest rate market, and indeed in any market where forward prices are quoted.
The part of the regulatory framework which is designed to enhance the safety and soundness of individual financial institutions, rather than the financial system as a whole.
 
 
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 ==
== See also ==
* [[Carry trade]]
* [[Capital adequacy]]
* [[Fisher Effect]]
* [[Macroprudential]]
* [[Four way equivalence model]]
* [[Interest rate parity]]
* [[International Fisher Effect]]
* [[Outturn]]
* [[Purchasing power parity]]
* [[Rational expectations]]
* [[Yield curve]]
 
[[Category:The_business_context]]
[[Category:Manage_risks]]

Revision as of 05:55, 27 March 2016

Bank regulation.

The part of the regulatory framework which is designed to enhance the safety and soundness of individual financial institutions, rather than the financial system as a whole.


See also