Assume the following information: Spot rate of Mexican peso ..........= $.100 180-day forward rate of Mexican peso
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Spot rate of Mexican peso ..........= $.100
180-day forward rate of Mexican peso .....= $.098
180-day Mexican interest rate ..........= 6%
180-day U.S. interest rate ...........= 5%
Given this information, is covered interest arbitrage worthwhile for Mexican investors who have pesos to invest? Explain your answer.
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