Question

____________the market school aruges that forward exchange rates do the best possible job for forecasting future spot exchange rates, so investing in exchagne rate forecasting services would be a waste of time.

Answer 1

Answer:

Efficient market school.

Explanation:

Efficient market school is the market school which argues that forward exchange rates do the best possible job for forecasting future spot exchange rates, so investing in exchange rate forecasting services would be a waste of time because it is impossible to have a consistent alpha generation on a risk adjusted excess returns basis as market prices are only affected by new informations.

The efficient market school also known as the efficient market hypothesis (EMH) is a hypothesis that states that asset (share) prices reflect all information and it is very much impossible to consistently beat the market.

Also, forward exchange rates are exchange rates controlling foreign exchange transactions at a specific future date or time.

Hence, according to the efficient market school it would be a waste of time investing in exchange rate forecasting services because all the information about an asset or security is already factored into their prices and as a result of the randomness of the market.