Saved Question 7 (5 points) Assume the following information: Spot rate of Mexican peso $0.100/peso 180-day forward rate of Mexican peso = $0.098/peso 180-day Mexican interest rate = 6% per year 180-day U.S. interest rate 5% per year Given this information, is covered interest arbitrage worthwhile for investors? If yes, where should they invest and where should they borrow? Yes. Borrow from the U.S. and Invest in Mexico. Yes. Borrow from Mexico and Invest in the U.S. No, it's not worthwhile as there won't be any profit made from covered interest arbitrage. Previous Page Next Page Page 7 of 25