Answer options are: -4.63% 204.85% 4.85% -5.15%

Let in and is represent the nominal 1-year interest rates for a home and foreign country, respectively. Suppose that the nominal interest rate in the United States (the "home" country) is 8.00%, while the nominal interest rate in Mexico (the "foreign country) is 3.00%. Use the formula from the previous part of the question, ej 11, IN 1, to determine the expected change in the value of the peso under IFE According to the IFE theory, the peso would be expected to change in value by approximately