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3. Today, the one-year U.S. interest rate is 5%, whereas Mexico's one-year interest rate is 10%. Today, the two-year annualized U.S. interest rate is

3. Today, the one-year U.S. interest rate is 5%, whereas Mexico's one-year interest rate is 10%. Today, the two-year annualized U.S. interest rate is 6%, whereas the two-year annualized Mexican interest rate is 12%. A U.S. MNC uses the forward rate to predict the future spot rate. Assume that interest rate parity exists. Today's spot rate of the peso is $0.055. a. Forecast the spot rate of the peso after 1 year. b. Forecast the spot rate of the peso after 2 years.

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