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Today the one-year us interest rate is 3 while the one-year

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Today, the one-year U.S. interest rate is 3%, while the one-year interest rate in Mexico is 8%. 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 retrun on investment) to an investor from Mexico who engages in covered interest arbitrage.

Reference no: EM13618937

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