According to the International Fisher Effect, If U

Multiple Choice

According to the international Fisher effect, if U.S. investors expect a 5 percent rate of domestic inflation over one year and a 2 percent rate of inflation in European countries that use the euro, and if they require a 3 percent real return on investments over one year, the nominal interest rate on one-year U.S. Treasury securities would be:

A) 2 percent.
B) 3 percent.
C) -2 percent.
D) 5 percent.
E) 8 percent.