Question
The Spot Rate (S0) for Mexican Pesos (MXP) for US dollars (USD) is MXP 19.8 to USD 1. The riskless rate of interest in the
The Spot Rate (S0) for Mexican Pesos (MXP) for US dollars (USD) is MXP 19.8 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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Financial Management Principles and Application
Authors: Arthur J. Keown, J. William Petty, David F. Scott, Jr.
10th edition
536514119, 536514110, 978-0536514110
