If U.S. investors expect a 1% rate of domestic inflation over one year, and a 2% rate of inflation in European countries that use the euro, and require a 3% real return on investments over one year, the nominal interest rate on one-year U.S. Treasury securities, taking into account the international Fisher effect, would be:

Select one:

a.

1%.

b.

4%.

c.

5%.

d.

3%.

e.

2%.