Question
Suppose that the six-month interest rate in the United States is 5%, while the six-month interest rate in Mexico is 8%. Further, assume the spot
Suppose that the six-month interest rate in the United States is 5%, while the six-month interest rate in Mexico is 8%. Further, assume the spot rate of the peso is $0.40.
According to interest rate parity (IRP), the forward rate premium of the peso with respect to the U.S. dollar should be __________ (not annualized).
A) -2.5000%
B) -2.2222%
C) -3.0556%
D) -2.7778%
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Case Studies In Finance
Authors: Robert F. Bruner
4th Edition
0072338628, 978-0072338621
