The Current Spot Rate for the Norwegian Krone Is $1

question 39

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 the U.S. 2 percent. A risk-free asset in the U.S. is yielding 4.5 percent. What real rate of return should you expect on a risk-free Norwegian security?

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

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Definitions:

Electra Complex

A psychoanalytic theory proposing a girl's psychosexual competition with her mother for possession of her father.

Freud

Psychoanalysis was founded by Sigmund Freud, an Austrian neurologist, as a method of treating psychopathology through conversational therapy between a psychoanalyst and a patient.

Weak Superego

A concept in psychoanalytic theory indicating a deficiency in the part of the psyche that is responsible for morality, self-restraint, and guilt, leading to impulsive behaviors.

Reality Principle

A principle in psychoanalytic theory where the ego seeks to satisfy the id's desires in realistic and socially appropriate ways.