Suppose the interest rate on one-year loans in the United States is 3% while in Mexico the
Question:
Suppose the interest rate on one-year loans in the United States is 3% while in Mexico the interest rate is 8%. The spot exchange rate is USD/MXN = 22.29 and the one-year forward rate is USD/MXN = 23.24.
a. In what country would you choose to borrow?
b. In which would you choose to lend?
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Related Book For 
Fundamentals Of Corporate Finance
ISBN: 9781264101566
11th Edition
Authors: Richard A. Brealey, Stewart C. Myers, Alan J. Marcus
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