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The interest rate on one-year Canadian government bond is 0.05% and the interest rate on one-year Mexican government bond is 2%. The current spot exchange

The interest rate on one-year Canadian government bond is 0.05% and the interest rate on one-year Mexican government bond is 2%. The current spot exchange rate between Mexican peso (MXP) and Canadian dollar (CAD) is 16.60 MXP/CAD. According to the covered interest rate parity theory, what should be the reasonable one-year forward exchange rate between Mexican peso (MXP) and Canadian dollar (CAD) ? Choose the closest answer below.

A.0.0614 CAD/MPX.

B.16.9235 MPX/CAD.

C.0.0728 CAD/MPX.

D.16.2827 MPX/CAD.

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