Suppose the Current Spot Rate for the Norwegian Kroner Is

question 63

Multiple Choice

Suppose the current spot rate for the Norwegian kroner is $1 = NKr6.7119.The expected inflation rate in Norway is 4 percent and in the U.S.3 percent.A risk-free asset in the U.S.is yielding 4.5 percent.What approximate real rate of return should you expect on a risk-free Norwegian security?

• A)1.0 percent
• B)1.5 percent
• C)2.0 percent
• D)2.5 percent
• E)3.0 percent

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