Question
The Spot Rate (S0) for Mexican Pesos (MXP) for US dollars (USD) is MXP 20.5 to USD 1. The riskless rate of interest in the
The Spot Rate (S0) for Mexican Pesos (MXP) for US dollars (USD) is MXP 20.5 to USD 1.
The riskless rate of interest in the US for 3 months (RUS) is 0.25%. The riskness rate in Mexico (Foreign Country) is 1.6%.
According to the Covered Interest Rate Parity relationship, what should be the 3-month Forward rate (F) of MXP for USD? (Note: Your answer should be the number of MXP for USD 1 in the 3-month Forward rate for MXP for USD.)
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Global Investments
Authors: Bruno Solnik, Dennis McLeavey
6th edition
321527704, 978-0321527707
