The Current Spot Rate for the Norwegian Krone Is $1

question 63

Multiple Choice

The current spot rate for the Norwegian krone is $1 = NKr6.83. The expected inflation rate in Norway is 2 percent and in the U.S. 4 percent. A risk-free asset in the U.S. is yielding 5 percent. What risk-free rate of return should you expect on a Norwegian security?

• A) 2%
• B) 3%
• C) 4%
• D) 5%
• E) 6%

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