Suppose That the Nominal Risk-Free Rate of Interest in Canada

Suppose that the nominal risk-free rate of interest in Canada is 5%. The nominal risk-free rate in Germany is 8% with inflation of 6%. What is the approximate inflation rate in Canada?

A) 2.0%
B) 3.0%
C) 4.0%
D) 5.0%
E) 6.8%