IBM has accepted a project for the Mexican government, for which it will receive 8 0 million
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Question:
IBM has accepted a project for the Mexican government, for which it will receive million pesos in years. The current exchange rate is $ per peso. To hedge its exposure to the exchange rate, the company will use a forward contract to sell all pesos in years. The annual interest rate over years is in the US and in Mexico. What is the year forward rate if interest rate parity holds in $ per peso
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