3 today the one-year us interest rate is 2 while the, Financial Management

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3 today the one-year us interest rate is 2 while the

3 Today, the one-year U.S. interest rate is 2%, while the one-year interest rate in Mexico is 6%. The spot rate of the Mexico peso (MXP) is $.08 the one-year forward rate of the MXP exhibits a 11% discount. Determine the yield (percentage return on investment) to an investor from Mexico who engages in covered interest arbitrage.

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