Question: QUESTION 5 Use the following information to answer the next two questions. An investment banker in Spain notices that 1 year interest rates in Spain

QUESTION 5 Use the following information to answer the next two

QUESTION 5 Use the following information to answer the next two questions. An investment banker in Spain notices that 1 year interest rates in Spain and Mexico are 8% and 12%, respectively. Current spot rates are as follows: 1.02/S, S.15/MP The one year forward rate is .18/MP and the expected spot rate one year from now is .14/MP. What should the forward premium be for IRP to hold? .037 -.0357 .04 0-.04 QUESTION 6 Assuming that the banker has access to one million euros, find her covered interest arbitrage profit (in euros). Round intermediate steps to four decimals. 00 38,600 197,700 237,700

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