Determine the forward rate and spot rate, Financial Management

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Determine the forward rate and spot rate

Response to the following problem:

Assume that the forward rate and spot rate of the Mexican peso are normally similar at a given point in time. Assume that the peso has depreciated consistently and substantially over the last 3 years. Would the forward rate have been biased over this period? If so, would it typically have overestimated or underestimated the future spot rate of the peso (in dollars)? Explain.

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Financial Management: Determine the forward rate and spot rate

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