An Italian investor invested 10,000 into a 50 British stock. Two years after investment, the stock pays a 1 dividend, and sells for 54. The exchange rate has changed from 1.25 per pound when he bought the shares to 1.30 per pound when he sold it, although he sold 10,000 forward at the forward rate of 1.28 per pound. The Holding Period Return is:

1. 6.02% p.a.
2. 7.89% p.a.
3. 16.40% p.a
4. 12.40% p.a.
5. None of the other answers