Assume the following information: Mexican one-year interest rate = 9% U.S. one-year interest rate = 3%...

 

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Assume the following information: Mexican one-year interest rate = 9% U.S. one-year interest rate = 3% Peso spot rate = 0.12 $/p Peso forward rate = 0.06 $/p If interest rate parity exists, how much money you can make per each unit. Assume the following information: Mexican one-year interest rate = 9% U.S. one-year interest rate = 3% Peso spot rate = 0.12 $/p Peso forward rate = 0.06 $/p If interest rate parity exists, how much money you can make per each unit.

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Interest rate parity is an economic theory that suggests there should be an equilibrium rela... View the full answer