1. Considering both Blades’ current practices and future plans, how can the company benefit from forecasting the baht-dollar exchange rate?

2. Which forecasting technique (i.e., technical, fundamental, or market-based) would be easiest to use in forecasting the future value of the baht? Why?

3. Blades is considering using either current spot rates or available forward rates to forecast the future value of the baht. Available forward rates currently exhibit a large discount. Do you think the spot or the forward rate will yield a better market-based forecast? Why?

4. The current 90-day forward rate for the baht is $.021. By what percentage is the value of the baht expected to change over the next quarter according to a market-based forecast using the forward rate? What will be the value of the baht in 90 days according to this forecast?

5. Assume that the technical forecast has been more accurate than the market-based forecast in recent weeks. What does this indicate about market efficiency for the baht-dollar exchange rate? Do you think it means that technical analysis will always be superior to other forecasting techniques in the future? Why or why not?

6. What is the expected percentage change in the value of the baht during the next quarter based on the fundamental forecast? What is the forecasted value of the baht using this forecast? If the value of the baht 90 days from now turns out to be $.022, which forecasting technique is the most accurate? (Use the absolute forecast error as a percentage of the realized value to answer the last part of this question.)

7. Do you think the technique that you have identified in question 6 will always be the most accurate? Why or why not?