1. From Jan 2008 to Jan 2009 the British pound to U. S. dollar exchange rate increased from 1.9702 pounds per dollar to 1.4462 pounds per dollar. A U. S. based investor buys a one-year pound denominated bond for $2,000 in Jan 2008. One year later the bond provides 4% rate of return in yen. What is the rate of return in dollars?

26% 7% -7% -26%

2. From Jan 2008 to Jan 2009 the British pound to U. S. dollar exchange rate increased from 1.9702 pounds per dollar to 1.4462 pounds per dollar. Which one of the following statements describes this change?

U. S. dollar appreciated against the pound by approximately 26%.

U. S. dollar appreciated against the pound by approximately 36%.

U. S. dollar depreciated against the pound by approximately 36%.

U. S. dollar depreciated against the pound by approximately 26%.