Suppose the Current Spot Rate for the Norwegian Krone Is

question 62

Multiple Choice

Suppose the current spot rate for the Norwegian krone is NKr5.9433 while the expected inflation rate in Norway is 3.1 percent and 1.7 percent in the U.S. A risk-free asset in the U.S. is yielding 3.2 percent. What risk-free rate of return should you expect on a Norwegian security?

• A) 5.1 percent
• B) 4.0 percent
• C) 4.4 percent
• D) 5.9 percent
• E) 4.6 percent

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