The rise of globalization is due to the many companies that have become multinational corporations for various reasons-for example, to access better technology, to enter new markets, to obtain more raw materials, to find funding resources, to minimize production costs, or to diversify business risk. This multimarket presence exposes companies to different kinds of risk as well-for example, political risk and exchange rate risk. Several factors affect the exchange rate of a currency with another currency. Which of the following statements are true about the factors that have an impact on exchange rates? Check all that apply. An increase in inflation tends to increase the currency's value with respect to other currencies with lower inflation. When a government limits imports and restricts foreign exchange transactions, its currency's value tends to increase relative to other currencies. If a government intends to prevent its currency's value from falling relative to other currencies, it will purchase its currency from sellers in the market. If the demand for a currency increases, the currency's value will increase relative to other currencies. 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 5% annual nominal return. The spot exchange rate is 101.12 per dollar. The 90-day forward exchange rate is 100.25 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 _________. Which of the following statements is implied by interest rate parity theory? Interest rates in all countries should be the same. Interest rates in all countries with the same political risk should be the same. If two countries have the same inflation rate, they should have the same interest rate, too. An investment in one's home country should have the same return as a similar investment in a foreign country