E-book Page 247 question #7 7. Covered Interest Arbitrage Assume the following information: Spot rate of Mexican peso 180-day forward rate of Mexican peso 180-day Mexican interest rate 180-day U.S. interest rate $.100 $.098 6% 5% Given this information, is covered interest arbitrage worthwhile for Mexican investors who have pesos to

Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
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E-book Page 247 question #7
7. Covered Interest Arbitrage Assume the
following information:
Spot rate of Mexican peso
180-day forward rate of Mexican peso
180-day Mexican interest rate
180-day U.S. interest rate
$.100
$.098
6%
5%
Given this information, is covered interest arbitrage
worthwhile for Mexican investors who have pesos to
invest? Explain your answer.
Transcribed Image Text:E-book Page 247 question #7 7. Covered Interest Arbitrage Assume the following information: Spot rate of Mexican peso 180-day forward rate of Mexican peso 180-day Mexican interest rate 180-day U.S. interest rate $.100 $.098 6% 5% Given this information, is covered interest arbitrage worthwhile for Mexican investors who have pesos to invest? Explain your answer.
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