Question
Currently, the USD/MXN rate is 19.5400 and the three-month forward exchange rate is 20.1800. The three-month interest rate is 3.7% per annum in the U.S.
Currently, the USD/MXN rate is 19.5400 and the three-month forward exchange rate is 20.1800. The three-month interest rate is 3.7% per annum in the U.S. and 6.7% per annum in Mexico. Assume that you can borrow MXP10,000,000 or its equivalent in USD. How much do you make/lose if you borrow locally and invest abroad?
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Personal Financial Planning For Executives And Entrepreneurs
Authors: Michael J. Nathanson, Jeffrey T. Craig, Jennifer A. Geoghegan, Nadine Gordon Lee, Michael A. Haber, Seth P. Hieken, Matthew C. Ilteris, D. Scott McDonald, Joseph A. Salvati, Stephen R. Stelljes
1st Edition
3030405273, 978-3030405274
