If the inflation rate in the United States is expected to average 4% i

If the inflation rate in the United States is expected to average 4% in the future and the inflation rate in Denmark is expected to average 7%, what spot rate is expected to be in effect in three years? Assume the Danish kroner per U.S.

dollar exchange rate is now $0.20.
A) $0.245
B) $0.219
C) $0.177
D) $0.192
E) $0.206

ANSWER

B