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D 2. A US investor is considering investing in Mexico. The exchange rate today is $1 US buys 5 Pesos, the Mexican interest ra
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Answer #1

Investment in USD = $100

Investment converted to spot in pesos = $100 x 5 = 500 pesos

Future value of investment in pesos = 500 x 1.06 = 530 pesos

Expected exchange rate = 3.75

Therefore Future value in USD = 530 pesos / 3.75 = $141.33

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