If a us uses forward rate to forecast exchange rate of the, Financial Management

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If a us uses forward rate to forecast exchange rate of the

The Mexican one-year interest rate is 9 percent, while the U.S. one-year interest rate is 3 percent. Assume that interest rate parity exists. If a U.S. uses the forward rate to forecast the exchange rate of the peso in one year, the expected effective yield from investing in a one-year deposit in Mexico is? Show work and discuss.

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