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Pavel [41]
3 years ago
12

If u.s. firms attempt to use covered interest arbitrage to capitalize on the high argentine peso interest rate, what forces shou

ld occur?
Business
1 answer:
lesya [120]3 years ago
7 0

Answer:

The answer is: Downward pressure on the Argentine peso's forward rate

Explanation:

Forward rates are interest rates applicable to financial transactions that will happen in the future.

Currently the Argentine peso is yielding a high interest rate. If American firms try to benefit from this by investing in financial transactions involving Argentine pesos, they will eventually put downward pressure to reduce Argentine peso's forward rate. As the demand for Argentine pesos increase, they will yield lower interest rates.

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In a situation wherein Country Y has a progressive tax system for income, with no credits or deductions, a CEO earning $2.5 million per year would pay the most as a percentage of income in the country Y. Therefore, the option D holds true.

<h3>What is the significance of a progressive tax system?</h3>

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