The spot rate on the Norwegian kroner is 8.49.The exchange rate one year from now is expected to be 8.53 assuming that relative interest rate parity exists.Interest rates in Norway are 2 percent.What is the interest rate in the U.S.?
A) 1.53 percent
B) 2.0 percent
C) 1.77 percent
D) 1.04 percent
E) 1.24 percent
Correct Answer:
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