The Current Spot Rate for the Norwegian Krone Is $1

question 287

Multiple Choice

The current spot rate for the Norwegian krone is $1 = NKr6.83. The expected inflation rate in Norway is 3 percent and in Canada 2 percent. A risk-free asset in Canada is yielding 4.5 percent.
What real rate of return should you expect on a risk-free Norwegian security?

• A) 4.5 percent
• B) 5.0 percent
• C) 5.5 percent
• D) 6.0 percent
• E) 6.5 percent

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