The relationship between interest rates and exchange rates can be represented through the concept of interest rate parity. Consider the following: An American investor is considering investing $1,000 in default-free 90-day Japanese bonds that promise a 4% annual nominal return. - The spot exchange rate is 103.40 per dollar. - The 90-day forward exchange rate is y102.29 per dollar. The investor's annualized return on these bonds-if he or she can lock in the dollar return by selling the foreign currency in the forward market-will be Interest rate parity recognires that when you invest in a country other than your home country, two factors affect your investment-returns on the investment itself and changes in the exchange rate. Which of the following would cause the overall retum on your investment to be higher than the investment's stated retarn? Your home currency appreciates relative to the currency in which the investment is denominated. The currency in which the investment is denominated aporeciates relative to your home currency. The currency in which the investment is denominated depredates relative to your home currency