Question: In this problem, assume Rush Corp needs to borrow/finance $500,000 for one year for its Mexican operations. The annual interest rate is 2% in the

In this problem, assume Rush Corp needs to borrow/finance $500,000 for one year for its Mexican operations. The annual interest rate is 2% in the United States and 8% in Mexico. Assume that there are no profits to be made in a covered interest arbitrage trade.

Can Rush Corp benefit from borrowing Mexican pesos and simultaneously purchasing pesos one year forward to hedge the exchange rate risk? Explain.

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