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2 . Covered Interest Arbitrage. Assume the following information: Spot rate of Mexican peso = $.100 180day forward rate of Mexican peso = $.099 180day

2. Covered Interest Arbitrage. Assume the following information:

Spot rate of Mexican peso = $.100

180day forward rate of Mexican peso = $.099

180day Mexican interest rate = 6%

180day U.S. interest rate = 4%

Given this information, is covered interest arbitrage worthwhile for Mexican investors who have pesos to invest? Explain your answer. Assume you have 1,000,000 Pesos to invest (MXP).

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