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The USD/MXN spot FX is 18.91. You can borrow or deposit USD for one year at...

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Finance

The USD/MXN spot FX is 18.91. You can borrow or deposit USD forone year at 2.36%. You can borrow or deposit MXN for one year at8.12%. You get a 1-year FX forward quote from a bank of 20.75USD/MXN. What is your gain/loss position in millions of USD if youborrow USD 100 mil., convert USD/MXN spot, lend MXN, and lock inyour FX rate using the 1-year forward contract? Take to 4decimals.

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3.6 Ratings (341 Votes)
It is given that Spot rate of home country USA Sh 1891 Rate of interest of borrow or lend in USA Rh 236 Rate of interest of borrow or lend in MXN Rf 812 Forward rate of USDMXN Fh 2075 Now if we borrow 100 mill now we will    See Answer
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The USD/MXN spot FX is 18.91. You can borrow or deposit USD forone year at 2.36%. You can borrow or deposit MXN for one year at8.12%. You get a 1-year FX forward quote from a bank of 20.75USD/MXN. What is your gain/loss position in millions of USD if youborrow USD 100 mil., convert USD/MXN spot, lend MXN, and lock inyour FX rate using the 1-year forward contract? Take to 4decimals.

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