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Assume that interest rate parity holds. The U.S. five year interest rate is 3% annualized, and the Mexican five year interest rate is 7% annualized.

Assume that interest rate parity holds. The U.S. five year interest rate is 3% annualized, and the Mexican five year interest rate is 7% annualized. Todays spot rate of the Mexican peso is $.20. What is the approximate five year forecast of the pesos spot rate if the five year forward rate is used as a forecast?

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