Question
Assume that interest rate parity holds. The U.S. fiveyear interest rate is 0.08 annualized, and the Mexican fiveyear interest rate is 0.05 annualized. Todays spot
Assume that interest rate parity holds. The U.S. fiveyear interest rate is 0.08 annualized, and the Mexican fiveyear interest rate is 0.05 annualized. Todays spot rate of the Mexican peso is $0.21. What is the approximate 10year forecast of the pesos spot rate if the 10year forward rate is used as a forecast?
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International financial management
Authors: Jeff Madura
13th edition
978-1337099738, 1337099732, 9781337515894, 1337515892, 978-1337587211
