The current spot rate for the Norwegian krone is $1 = NKr6.83. The expected inflation rate in Norway is 3 % and in Canada 2 %. A risk-free asset in Canada is yielding 4.5 %. What real rate of return should you expect on a risk-free Norwegian security?

Question

Quizplus · Accepted Answer

The Answer of The current spot rate for the Norwegian krone is $1 = NKr6.83. The expected inflation rate in Norway is 3 % and in Canada 2 %. A risk-free asset in Canada is yielding 4.5 %. What real rate of return should you expect on a risk-free Norwegian security?

The Current Spot Rate for the Norwegian Krone Is $1