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8. If interest rate is 4.5% in Canada and 8% in Mexico, according to IFE, what should be the percentage change in the value o
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Answer #1

International Fisher effect formula = [(1+ i c)/ (1+ im ) ]-1

= [(1+ 4.5%)/ (1+ 8% ) ]-1

= -0.0324 or 0.0324

The percentage change in the value of CAD 1 against the Mexico Peso in the future is -0.0324.

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