CME exchange rates. The website of the Chicago Mercantile Exchange (CME) provides information…

CME exchange rates. The website of the Chicago Mercantile Exchange (CME) provides information about the exchange and the futures contracts offered on the exchange. Its address is http://www.cme.com.

a Go to the section on ‘Prices’ and then to the ‘Daily and Weekly Charts’. Describe the trend of a peso futures contract over the last few months. What does this trend suggest about changes in forecasts of the peso over the period assessed (assuming that the futures rate was used as a forecasting method)? What do you think caused the futures prices to change over the last few months?

b Select a peso futures contract that has at least one month until its settlement date. Determine whether that futures contract would have underestimated or overestimated the spot rate as of the settlement date if it had been used to forecast the future spot rate. Was the forecast accurate?