Multiple Choice
Assume that interest rate parity holds. The Mexican interest rate is 50%, and the U.S. interest rate is 8%. Subsequently, the U.S. interest rate decreases to 7%. According to interest rate parity, the peso's forward ____ will ____.
A) premium; increase
B) discount; decrease
C) discount; increase
D) premium; decrease
Correct Answer:
Verified
Correct Answer:
Verified
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