What is the real peso return to the mexican investor

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The returns over a 10 year period for holding a 5% yield US treasury bond is (1+5%)^10 -1 = 62.89%. If the inflation rate over the same time period was 2% a year what would be real returns over 10 years? Suppose a Mexican investor also invest in the same US treasury bond by converting her pesos and buying the bonds in the US with the intention of converting back to peso at the end of ten years. If RPPP holds, what is the real peso return to the Mexican investor over 10 years?

Reference no: EM132731423

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