What is the one-year forward rate of a mexican peso

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Biscayne Co. will be receiving Mexican pesos today and will need to convert them into Australian dollars. Today, a U.S. dollar can be exchanged for 13 Mexican pesos. An Australian dollar is worth one-half of a U.S. dollar.

Problem 1: What is the spot rate of a Mexican peso in Australian dollars? Round your answer to the nearest cent.

Problem 2: Assume that interest rate parity exists and that the annual risk-free interest rate in the United States, Australia, and Mexico is 10 percent. What is the one-year forward rate of a Mexican peso in Australian dollars? Round your answer to the nearest cent.

Reference no: EM132752083

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