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Assume that interest rate parity holds. The U.S. five-year interest rate is 2.5% annualized, and the Mexican five-year interest rate is 4% annualized. Today's spot
Assume that interest rate parity holds. The U.S. five-year interest rate is 2.5% annualized, and the Mexican five-year interest rate is 4% annualized. Today's spot rate of the Mexican peso is $.20. What is the approximate five-year forecast of the peso's spot rate if the five-year forward rate is used as a forecast?
$.174 | ||
$.226 | ||
$.164 | ||
$.183 |
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