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7. You buy a stock for $10 per share and sell it for $12 after holding it for slightly over a year and collecting a
7. You buy a stock for $10 per share and sell it for $12 after holding it for slightly over a year and collecting a $0.50 per share dividend. (6point) Your rate of return is A) 18/1% B) 19.6% C) 25.0% D) 20.2% E) 17.4% 8. You can buy or sell the E spot at $1.98 to the pound. You can buy or sell the pound 1 year forward at $2.01 to the pound. If US. annual interest rates are 5%, what must be the approximate one-year British interest rate if interest rate parity holds? (6 point) A) 4.00% B) 5.25% C) 2.75% D) 3.48% E) 6.52% 9. At the beginning of the year the exchange rate between the Brazilian Real and the U.S. dollar is 2.5 Reals per dollar. Over the year Brazilian inflation is 16% and U.S. inflation is 2%. Ifparity holds, at year end the exchange rate should be how much Reals per dollar. (6 point)
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