Which one of the following would be an answer to why the forward exchange rate is an unbiased predictor of the future spot rate?
A) The forward rate is greater than the conditional expectation of the future spot rate.
B) The forward rate equals than the conditional expectation of the future spot rate.
C) The forward rate is less than the conditional expectation of the future spot rate.
D) The current spot rate is greater than the conditional expectation of the future spot rate.
Answer: B
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