Assume the expected inflation rate in Finland is 2 percent while it is 4 percent in the U.S. Also assume a risk-free asset in the U.S. is yielding 4.5 percent. What nominal rate of return should you expect on a risk-free Finnish security?

Multiple Choice

• 2.0 percent

• 3.0 percent

• 4.0 percent

• 1.5 percent

• 2.5 percent