Assume the current spot rate for the Norwegian krone is $1=NKr6.83, the expected inflation rate in Norway is 2.4% while it is 2.6 in the U.S. A risk-free asset in the U.S. is yielding 4.5%. What real rate of return should you expect on a risk-free Norwegian security?
A. 4.3%
b. 4.7%
c. 1.9%
d. 2.1%
e. 2.4%