Question: Argentina commonly has a much higher nominal interest rate than the U.S. Even though the Argentinian rates are higher, some large institutional investors do not

Argentina commonly has a much higher nominal interest rate than the U.S. Even though the Argentinian rates are higher, some large institutional investors do not invest in Argentine money market securities, even when they believe the securities have low credit (default) risk. Use the international Fisher effect (IFE) to explain why Argentine money market securities paying a relatively high nominal interest rate may not be a good investment for U.S. investors.

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