Assume the current spot rate for the Norwegian krone is $1 = NKr5.06.The expected inflation rate in Norway is 2 percent and in the U.S.its 4 percent.A risk-free asset in the U.S.is yielding 6 percent.What risk-free rate of return should you expect on a Norwegian security?
A) 2%
B) 3%
C) 4%
D) 5%
E) 6%
Correct Answer:
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