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Suppose the interest rate on 1-year loans in the United States is 2.0% while in Mexico the interest rate is 7.0%. The spot exchange rate
| Suppose the interest rate on 1-year loans in the United States is 2.0% while in Mexico the interest rate is 7.0%. The spot exchange rate is MXN15 = USD1 and the 1-year forward rate is MXN20 = USD1. |
| a. | In what country would you choose to borrow? | ||||
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| b. | In which would you choose to lend? | ||||
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Restructuring And Innovation In Banking
Authors: Claudio Scardovi
1st Edition
331940203X, 978-3319402031
