a) b) Assume that the forward rate is used to forecast the...
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a)
b)
Assume that the forward rate is used to forecast the spot rate. The forward rate of the Canadian dollar contains a-6% discount. Today's spot rate of the Canadian dollar is $.80. The spot rate forecasted for one year ahead is: $.860 $.848 $.740 s.752 Assume that interest rate parity holds. The U.S. five-year interest rate is 5% annualized, and the Mexican five-year interest rate is 8% annualized. Today's spot rate of the Mexican peso is .3011. What is the approximate five-year forecast of the peso's spot rate if the five-year forward rate is used as a forecast? $.193 $.256 $.262 O $.277
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