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Exercise. (3 pts) You are a Germany-based investor. You just sold a share of BP, a U.K firm, for GBP1,320. The share was bought for
Exercise. (3 pts) You are a Germany-based investor. You just sold a share of BP, a U.K firm, for GBP1,320. The share was bought for 1,200GBP a year ago. The exchange rate is GBP/EUR=1.1220 now and was GBP/EUR=1.0200 a year ago. You received GBP60 as a cash dividend immediately before the share was sold. 1. What is the rate of return in GBP terms? a. 5% b. 10% c. 13.64% d. 15% 2- What is the rate of change in the exchange rate GBP/EUR? 6 / 10 a. 9.09% b. -9.09% c. 10% d. -10% 3- Compute the rate of return on this investment in terms of EUR. a. 26.5% b. 25% c. 4.55% d. 25.45%
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