Question
The one-year risk-free rate in the U.S. is 4.50 percent and the one-year risk-free rate in Mexico is 6.86 percent. The one-year forward rate between
The one-year risk-free rate in the U.S. is 4.50 percent and the one-year risk-free rate in Mexico is 6.86 percent. The one-year forward rate between the Mexican peso and the U.S. dollar is MXN12.38/$. What is the spot exchange rate? Assume interest rate parity holds.
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Principles of managerial finance
Authors: Lawrence J Gitman, Chad J Zutter
12th edition
9780321524133, 132479540, 321524136, 978-0132479547
