The Current Spot Rate for the Norwegian Krone Is $1

question 347

Multiple Choice

The current spot rate for the Norwegian krone is $1 = 6.5483NKR. The expected inflation rate in Norway is 1 percent and in Canada 3.8 percent. A risk-free asset in Canada is yielding 4.5 percent.
What risk-free rate of return should you expect on a Norwegian security?

• A) 1.3 percent
• B) 1.7 percent
• C) 2.1 percent
• D) 2.8 percent
• E) 3.5 percent

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