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(6 points) The International Fisher Effect assumes that investors in all countries expect to earn the same risk-adjusted real interest rate. If we look at

(6 points) The International Fisher Effect assumes that investors in all countries expect to earn the same risk-adjusted real interest rate. If we look at nominal interest rates in several developed countries, it is likely that risks will be similar in each. Yet when we see quoted nominal interest rates they will be different in different countries even if risks are similar. According to the international Fisher effect, what is the only possible explanation for these differences in nominal interest rates?

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