Answered step by step
Verified Expert Solution
Question
1 Approved Answer
6.An investor in the U.S. takes US$1,000,000 on January 1, 2002 and invests in shares traded on the Tokyo Exchange (TSE). 9 S, = 130.00/5
6.An investor in the U.S. takes US$1,000,000 on January 1, 2002 and invests in shares traded on the Tokyo Exchange (TSE). 9 S, = 130.00/5 On January 1, 2002 the spot rate was so the investor received 130,000,000 and used this to acquire 6,500 shares at 20,000 each. On January 1, 2003 the investor sold the shares at a price of 25,000 per share yielding S = 125.00/5 162,500,000 and converted the shares back to USS at the new spot rate which resulted in $1,300,000. To calculate the return on a cross-border investment both the change in the share price and the change in the currency value affect the total return of the portfolio. The formula for the total return in U.S. dollars is given below: R 1+1 shares
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started