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The US risk-free rate is 8% and the Mexico rate is 7%. The spot and 10-month forward exchange rates are 20.9 and 19.9 peso/$, respectively.
The US risk-free rate is 8% and the Mexico rate is 7%. The spot and 10-month forward exchange rates are 20.9 and 19.9 peso/$, respectively. Find the covered interest arbitrage profit (expressed in $) you'll make in10 months if you can borrow either $1M or its equivalent in pesos?
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Advanced Accounting
Authors: Susan S. Hamlen, Ronald J. Huefner, James A. Largay III
2nd edition
1934319309, 978-1934319307
