In January 2002, the government of Argentina broke away from its currency board system that had tied

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In January 2002, the government of Argentina broke away from its currency board system that had tied the peso to the U.S. dollar and devalued the peso from APs1.0000/$ to APs1.40000. This caused some Argentine firms with dollar-denominated debt to go bankrupt. Should a U.S. or European parent in good financial health "rescue" its Argentine subsidiary that would otherwise go bankrupt because of the inept nature of Argentine political and economic management in the four or five years prior to January 2002? Assume the parent has not entered into a formal agreement to guarantee the debt of its Argentine subsidiary.
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Fundamentals of Multinational Finance

ISBN: 978-0205989751

5th edition

Authors: Michael H. Moffett, Arthur I. Stonehill, David K. Eiteman

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