Question
An Australian investor has purchased shares in a company listed on the New York Stock Exchange in the United States. The companys share price is
An Australian investor has purchased shares in a company listed on the New York Stock Exchange in the United States. The companys share price is US$10 at the beginning of the year and the share price is US$15 at the end of the year. At the end of the year, the company paid dividends of US$1 per share. The exchange rate at the beginning of the year is US$1 is worth A$1.30 and the exchange rate at the end of the year is US$1 is worth US$1.40. Assume that the investor purchased the shares at the beginning of the year and sold them at the end of the year.
a. What was the investors return for the year in United States dollars?
b. What was the investors return for the year in Australian dollars?
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