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If interest rates in Mexico is 3.46% while US interest rates is 2.0%. Based on International Fisher Effect, what should be the expected change in
If interest rates in Mexico is 3.46% while US interest rates is 2.0%. Based on International Fisher Effect, what should be the expected change in the spot exchange rate between US$/MXN if the current spot rate is MXN19.41/US$? No effect on the exchange rate Appreciation in the Mexican peso by MXN 0.00075 O Depreciation in Mexican peso by MXN 0.00075 Appreciation in the United States dollar by US$0.00075 O Depreciation in the United States dollar by US$0.00075 A foreign exchange trader can invest US$10 million, or the foreign currency equivalent in a covered interest arbitrage. Using the following quotes, should the trader make a covered interest arbitrage and if so, how much would be the dollar return? Arbitrage Funds available $10,000,000 Spot exchange rate (CA$/US$) 1.257 100-day forward rate (CA$/US$) 1.259 100-day US dollar interest rate 1.50% 100-day Canada interest rate 1.75% O No; $0 O Yes; $158,836.38 Yes; $191,189.34 Yes; $64,599.35 Yes; $32,648.27 A foreign exchange trader can invest US$10 million, or the foreign currency equivalent in a covered interest arbitrage. Using the following quotes, what should the spot exchange rate be to achieve interest rate parity? (rounded) Arbitrage Funds available $10,000,000 Spot exchange rate (CA$/US$) 1.257 100-day forward rate (CA$/US$) 1.259 100-day US dollar interest rate 1.50% 100-day Canada interest rate 1.75% O CA$ 1.258/US$ CA$ 1.256/US$ O CA$1.255/US$ O CA$1.262/US$ O CA$ 1.260/US$ If interest rates in Brazil is 6.5% while US interest rates is 2.75%. Based on International Fisher Effect, what should be the new spot exchange rate between US$/R$ if the current spot rate is R$4.17/US$? (rounded) US$0.25/R$ O US$0.23/R$ US$4.18/R$ US$4.01/R$ O US$0.24/R$
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