Analyze the movement of the USD against the foreign currency for Portfolio A. Justify your choice.

Kamala Gupta, a currency management consultant, is hired to evaluate the performance of two portfolios. Portfolio A and Portfolio B are managed in the United States and performance is measured in terms of the US dollar (USD). Portfolio A consists of British pound (GBP) denominated bonds and Portfolio B holds euro (EUR) denominated bonds.

Gupta calculates a 19.5% domestic-currency return for Portfolio A and 0% domesticcurrency return for Portfolio B.

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Template for Question 1 Asset Portfolio A Justification Foreign-Currency Portfolio Return 15% USD Relative to Foreign-Currency (circle one) appreciated depreciated