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The Mexican peso spot exchange rate is 12.75 peso per dollar. The nominal annual interest rate in Mexico is 6% and the nominal annual interest

The Mexican peso spot exchange rate is 12.75

peso per dollar. The nominal annual interest

rate in Mexico is 6% and the nominal annual interest in the US is 1%. What is the

approximate 5-year forward premium/discount of the peso?

27.3% premium

27.3% discount

21.5% premium

21.5% discount

5.0% premium

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