Use the following information to answer the next two questions.
An investment banker in Spain notices that 1 year interest rates in Spain and Mexico are 12% and 8%, respectively. Current spot rates are as follows:
€1.02/$, $.15/MP
The one year forward rate is €.18/MP and the expected spot rate one year from now is €.14/MP.
What should the forward premium be for IRP to hold?
.037
-.0357
.04
-.04