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Spot rate of Mexican peso= $ .100 1-year Forward rate of Mexican peso= $ .098 Mexican interest rate= 8% US. interest rate=5% Show how to

Spot rate of Mexican peso= $ .100

1-year Forward rate of Mexican peso= $ .098

Mexican interest rate= 8%

US. interest rate=5%

Show how to identify any arbitrage opportunity based on the Interest Rate Parity (IRP). What is your strategy to achieve your profit? What is your arbitrage profit per $1,000,000 (CIA) ?

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