Question: Please use the following information for the next 2 questions. You believe that IRP presently exists. The nominal annual interest rate in Mexico is 15%.

 Please use the following information for the next 2 questions. You

believe that IRP presently exists. The nominal annual interest rate in Mexico

Please use the following information for the next 2 questions. You believe that IRP presently exists. The nominal annual interest rate in Mexico is 15%. The nominal annual interest rate in the U.S. is 5%. You expect that annual inflation will be about 10% in Mexico and 2% in the U.S. The spot rate of the Mexican peso is $0.041 per Mexican peso. You will receive 1 million Mexican pesos in one year. Determine the expected amount of dollars that you will receive if you use an option 'hedge and believe in purchasing power parity (PPP), Both put options and call options on Mexican pesos are available with one year expiration date with an exercise price of $0.039/MXP and a premium of $0.005/MXP. $44,000.000 O$ 34,000,000 $39,215.686. $ 43,018.182. $33,018.182

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