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Assume that interest rate parity holds. The Mexican interest rate is 15%, and the U.S. interest rate is 8%. Subsequently, the U.S. interest rate decreases

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Assume that interest rate parity holds. The Mexican interest rate is 15%, and the U.S. interest rate is 8%. Subsequently, the U.S. interest rate decreases to 7%. According to interest rate parity, the peso's forward will O premium; increase to 38% O discount, decrease to 6.1% discount; increase to 6.9% O premium; decrease to 6.5% O discount; increase to 7.5%

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