You believe that IRP presently exists. The nominal annual interest rate in Mexico is $12\%.$ The nominal annual interest rate in the U$.$S$.$ is $2\%.$ You expect that annual inflation will be about $8\%$ in Mexico and $5\%$ in the U$.$S$.$ The spot rate of the Mexican peso is $$\mathrm{.}15$ per Mexican peso. Put options on Mexican pesos are available with a one$-$year expiration date $($European options$),$ an exercise price of $$0\mathrm{.}14$ per Mexican peso and a premium of $$0\mathrm{.}015$ per Mexican peso.

You will receive $1$ million Mexican pesos in one year.

Question $13(6\mathrm{.}66$ points$)$

Determine the expected amount of dollars that you will receive if you do not hedge and believe in purchasing power parity $($PPP$).$

Question $13$ options:

$$145,833\mathrm{.}33$

$$154,285\mathrm{.}71$

$$145,741\mathrm{.}29$

$$150,000\mathrm{.}00$

$$127,500\mathrm{.}00$

Question $14(6\mathrm{.}66$ points$)$

Determine the expected amount of dollars that you will receive if you use a currency put options hedge and believe in the purchasing power parity $($PPP$).$ For the future spot rate determined by the PPP$,$ round the calculation to the four decimal places.

Question $14$ options:

$$160,833\mathrm{.}33$

$$130,833\mathrm{.}33$

$$125,000\mathrm{.}00$

$$155,000\mathrm{.}00$

Question $15(6\mathrm{.}66$ points$)$

Determine the amount of dollars that you will receive if you use a forward hedge.

Question $15$ options:

$$127,500,00$

$$116,471\mathrm{.}01$

$$153,279\mathrm{.}12$

$$136,607\mathrm{.}14$