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Assume that the nominal interest rate in Argentina is 35 percent and the interest rate in the United States is 10 percent for oneyear securities

Assume that the nominal interest rate in Argentina is 35 percent and the interest rate in the United States is 10 percent for oneyear securities that are free from default risk.

What does the IFE suggest about the differential in expected inflation in these two countries? (5 marks) Using this information and PPP theory, describe the expected nominal return to U.S. investors who invest in Argentina. (5 marks

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