The current MXN/USD is 0.04 and the future USD/MXN rate is expected to be 1 USD=26 MEX.
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Question:
The current MXN/USD is 0.04 and the future USD/MXN rate is expected to be 1 USD=26 MEX. The interest rate is 4% in Mexico.
a. Based on the iFE, which of the two countries should have a higher interest rate? Why?
b. Compute the interest rate in the US.
Expert Answer:
a Spot rate for usdmxn is 1004 25 Forward rate is 26 Interest rate is 4 in Mexico We ... View the full answer
Related Book For 
Financial Management Theory and Practice
ISBN: 978-1305632295
15th edition
Authors: Eugene F. Brigham, Michael C. Ehrhardt
Posted Date:
