Use the following information: Annual interest rate Euros = 1.2% Annual interest rate Pesos = 6%...

Use the following information:

Annual interest rate Euros = 1.2%

Annual interest rate Pesos = 6%

Spot July 2, 2018 = 23.5 MXN / Euro

Expected Exchange Rate in the 4-month market = 22.3 MXN / Euro

What type of exchange would avoid arbitrage overdraft within 4 months?

Use two decimals in your answer. (round to two decimal places)

Expert Solution

jeff jeffy answered 2 years ago

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