The U.S. risk-free interest rate is 2.1% per year, the spot exchange rate is $1.25 per euro, and the one-year forward exchange rate is $1.26 per euro. If interest rate parity holds, what is the annual European risk-free interest rate? 1) 1.7% 2) 2.9% 3) 0.9% 473.3% 5) 1.3%