1.

Which of the following is not a method of forecasting exchange rate volatility?

A. using the absolute forecast error as a percentage of the realized value.
B. using the volatility of historical exchange rate movements as a forecast for the future.
C. using a time series of volatility patterns in previous periods.
D. deriving the exchange rate's implied standard deviation from the currency option pricing model.
Answer» B. using the volatility of historical exchange rate movements as a forecast for the future.


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