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107(b). Assume today that the U.S. five-year interest rate is 5% per year while the Mexican five-year rate is 8% per year. Assume also that

107(b). Assume today that the U.S. five-year interest rate is 5% per year while the Mexican five-year rate is 8% per year. Assume also that the pesos five year forward rate is $.25. What is todays spot rate of the peso at which interest rate parity holds?

a. $.131

b. $.226

c. $.262

d. $.140

e. None of the above

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