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Assume the following information: Mexican one-year interest rate = 15% U.S. one-year interest rate = 11% If interest rate parity exists, what would be the

Assume the following information:

Mexican one-year interest rate = 15%

U.S. one-year interest rate = 11%

If interest rate parity exists, what would be the forward premium or discount on the Mexican pesos forward rate? Would covered interest arbitrage be more profitable to U.S. investors than investing at home? Explain.

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