1. What is the euro-based return an Italian investor would have realized by investing 10,000 into a 50 British stock. One year after investment, the stock pays a 1 dividend, and sells for 54 the exchange rate has changed from 1.25 per pound to 1.30 per pound?

Select one:

a. 13.4%

b. 10%

c. 12.4%

d. 14.4%

2. Assume the time from acceptance to maturity on a $1,000,000 banker's acceptance is 180 days. Further, assume that the importing bank's acceptance commission is 1.25 percent and that the market rate for 180-day B/As is 5.0 percent. Calculate the amount the exporter will receive if he discounts the B/A with the importer's bank.