Question
Erin McQueen purchased 50 shares of BMW, a German stock traded on the Frankfurt Exchange, for 64.5 Euros per share exactly one year ago when
Erin McQueen purchased 50 shares of BMW, a German stock traded on the Frankfurt Exchange, for 64.5 Euros per share exactly one year ago when the exchange was 0.67 euros/US$. Today the stock is trading at 71.8 euros per share, and the exchange rate is 0.75 euros/US$.
a) Did the euro depreciate or appreciate relative to the US$ during the past year? Explain
b) How much in US$ did Erin pay for her 50 shares of BMW when she purchased them a year ago?
c) For how much in US$ can Erin sell her BMW shares today?
d) Ignoring brokerage fees and taxes, how much profit (or loss) in US$ will Erin realize on her BMW stock if she sells it today?
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