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Suppose that the six-month interest rate in the United States is 2%, while the six-month interest rate in Mexico is 3%. Further, assume the spot
Suppose that the six-month interest rate in the United States is 2%, while the six-month interest rate in Mexico is 3%. Further, assume the spot rate of the peso is $0.20. According to interest rate parity (IRP), the forward rate premium of the peso with respect to the U.S. dollar should be (not annualized). \begin{tabular}{l} 0.6796% \\ \hline0.9709% \\ \hline1.2621% \\ \hline1.0680% \end{tabular}
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