As of today, assume the following information is available:

a. Use the forward rate to forecast the percentage change in the Mexican peso over the next year.
b. Use the differential in expected inflation to forecast the percentage change in the Mexican peso over the next year.
c. Use the spot rate to forecast the percentage change in the Mexican peso over the nextyear.

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U.S. Mexico Real rate of interest required by investors Nominal interest rate Spot rate One-year forward rate 2% 2% 15% $.20 $.19 11%