The US $1$ year spot rate is $2\mathrm{.}16\%$ and the Mexican $1$ year spot rate is $4\mathrm{.}09\%.$ A US investor purchases a Mexican corporate bond with an expected $1$ year return of $9\mathrm{.}67\%,$ as measured in Mexican peso. The current USD$/$MXP exchange rate is $0\mathrm{.}1.$ If the investor decides to hedge the currency risk exposure in the forward market, what would be the expected return on this portfolio, if interest rate parity holds?

Enter answer in percents.

You Answered

$7\mathrm{.}74$ margin of error $\frac{+}{-}1\%$

The investor will make the local currency return, but also gain$/$lose on expected exchange rate changes.