1) Go to the Yahoo website -> HERE (do NOT use any other website)

In Quote Lookup in the upper right corner of the page, type the currency pair required for each question. The format is CADUSD=X if you want to find the price of 1 Canadian dollar in terms of US Dollars. Or USDCAD=X if you want the price of 1 US Dollar in terms of Canadian dollars.

If you hold your cursor on the graph, the date will appear at the bottom of the graph and the associated FX closing rate will appear at the right side of the graph.

For this question youll be looking at the:

Canadian Dollar (CAD)

British Pound (GBP)

Norwegian Krona (NOK)

South African Rand (ZAR)

i) Using April 5, 2015 as the starting date and March 11, 2018 as the end date, calculate the % change in the price of 1 USD in terms a (a) the Canadian Dollar and (b) the British Pound. In each case, state whether the USD appreciated or depreciated during this period.

ii) Using April 5, 2015 as the starting date and March 11, 2018 as the end date, calculate the % change in (a) the Norwegian Krona and (b) the South African Rand in terms of the US Dollar. In each case, state whether the NOK or ZAR appreciated or depreciated during this period.

1) i) If a Canadian investor had purchased 1,000 shares of Coca-Cola in the week of April 5, 2015 at $43 US per share , how much money would she have made or lost in C$ terms if she sold the shares in the week of March 11, 2018 at $39 US per share, ignoring commissions and taxes? (find the C$ FX rates in the Yahoo charts noted above).

ii) Of the total C$ gain or loss, how much was attributable to (a) the change in the value of Coke shares and (b) the change in the value of the Canadian Dollar? (Give your answer in C$ terms not % terms.)

2) Many investment advisors recommend diversifying investment portfolios by investing in foreign stocks and bonds. The purpose behind diversification is to reduce risk (ie. dont put all your eggs in one basket). What are the implications of foreign exchange rate changes on the net return for such a strategy given what youve learned above?