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Please define these topics and tell me how to calculate them, thanks.

1) Forecast bias.

2) Forecasting and market efficiency.

3) Forecasting exchange rate volatility.

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Joshua Stredder
Joshua StredderLv10
28 Sep 2019

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Related questions

1) MARKET EFFICIENCY AND ARBITRAGE

1) Explain briefly the three forms of Market Efficiency (ME) and their consequences. What are the conditions needed in order to have ME? Can you give a simple example of market inefficiency?

2) Consider the following data on the exchange rates in New York and the prices of the same commodity (cocoa) in three different markets.

NOTE. Remember that exchange rates are quoted as the price of the foreign in terms of domestic currency: USD/EU=1.12 (that is: you need 1.12 USD to get 1 EU).

EXCHANGE RATE MARKET

New York (Dollars/Euro) 1.12

London (Dollars/GBP) 1.54

Frankfurt (Euro/GBP) 1.375

STOCK MARKET

Price cocoa NYSE (quoted in dollars) 140

Price cocoa LSE (quoted in GBP) 100

Price cocoa FKT (quoted in Euro) 110

a) Consider the Exchange Rate Market only: Is there any possible arbitrage? Explain your answer

b) Consider both the Exchange Rate Market and the commodity market: Assume no transaction or transportation costs. Show all the possible arbitrages using both markets. Which one is more profitable? What are the consequences for the market prices?

The Production Possibilities Model is one of the first Economic Models students learn about.

a. Please explain what the mode teaches us.

b. Please explain each of the 4 assumptions of the model.

c. Please explain Productive Efficiency and how it relates to the PPC.

i. Define it and explain how it relates to the PPC.

d. Please explain Allocative Efficiency and how the point of AE is found.

i. Define it, ii. Discuss the significance of allocative efficiency relative to the model iii. Explain the 2 step process for finding the point of allocative efficiency on the PPC.

e. On the topic of Economic growth: i. What does it mean? ii. How can it be graphically represented? iii. What are the prerequisites to Economic growth? iv. Why is Economic growth important? v. What factors tend to limit growth?

f. The Presentville  Futureville case:

1. Explain what motivates each group to make decisions.

2. Explain the impact of those decisions on the future of each group.

3. Explain the relevance of this case for the U.S. Economy. 4. What does this case teach you? g. Law of increasing opportunity cost: 1. What does it tell us? 2. How could it be explained graphically? h. Explain how you could use the Production Possibility Model to represent the US Economy during 2008 - 2010.

1.The exchange rate value of the U.S. dollar increased recently. Is it good news or bad news? Why? Should we worry about it?

2.The U.S. has a whopping trade deficit. Why? Should we worry about it? Are we shipping all our jobs to China and Mexico? Could we save precious U.S. jobs by restricting imports from countries with cheap labor? Could we reduce our trade deficit by restricting imports?

3.The U.S. owes the rest of the world $2.9 trillion more than the rest of the world owes to the U.S., making the U.S. "the world's biggest debtor nation". Why is this? Should we worry about it?

I have to write essays about these 3 topics. Can you guys give me an idea of the right answers for each of them? Thank you in advance.

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