Suppose that the six - month interest rate in the United States is 1 % , while

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Question:

Suppose that the six

-

month interest rate in the United States is

1 %,

while the six

-

month interest rate in Mexico is

2 % .

Further, assume the spot rate of the peso is $

0.20 .

According to interest rate parity

(

IRP

),

the forward rate premium of the peso with respect to the U

.

.

dollar should be

? % (

not annualized

) .

Posted Date: May 18, 2024 11:03 PM

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Suppose that the six - month interest rate in the United States is 1 % , while

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