Question
c) The FX forecast indicates that the value of British Pound will fall vis--vis the US dollar over the next three months. You are considering
c) The FX forecast indicates that the value of British Pound will fall vis--vis the US dollar over the next three months. You are considering investing for three months in a dually listed stock on the NYSE as well as the LSE. Since it is the same stock, the risk-return profile is identical except for the fact that it is listed for trade in different jurisdictions with different currencies. Assuming you are a British citizen, where should you purchase the stock - Britain or the United States? Provide suitable arguments for your decision.
d) You are a poet at heart and anything that rhymes catches your attention. In one of your lectures, you heard your teacher advising you to be cautious against the "pump and dump" strategy. You being a poet were intrigued by the rhyme and play of words but your subconscious mind also recorded the actual meaning and context of the strategy along with the reason to exercise precaution. Tap into your subconscious and briefly explain the pump and dump strategy and the inherent danger in it.
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