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It costs 12.19 Mexican pesos to buy one US dollar. Interest rates on one year bonds of the Mexican government are 4.3%. Interest rates on

It costs 12.19 Mexican pesos to buy one US dollar. Interest rates on one year bonds of the Mexican government are 4.3%. Interest rates on one year bonds of the US government are 0.13%. How many peso would you expect to be able to sell for US$ using a forward contract that settles in one year?

What rate of depreciation or appreciation of the Mexican peso against the US$ must investors be anticipating over the next year, if expected returns on dollar- and peso-denominated assets are equal, given the facts of part (1)?

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