the 4) option is point A when the dollar return is lower than the euro return

Time Left:1 Refer to Figure 5. Equilibrium in the foreign exchange market when the dollar return is R1 is given at Figure 5 Foreign Exchange Market R2 R 1 Exchange rate E(S/Euro) E1 E[Euro return] Rates of Return (in dollar terms) 1) point A, so the interest parity condition holds. O 2) point A, but the interest parity condition does not hold. ( 3) point A when the dollar return is higher than the euro return