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For the Q1, please solve the profit and rate of return, thx! Suppose you are a euro-based investor who just sold Microsoft shares that you
For the Q1, please solve the profit and rate of return, thx!
Suppose you are a euro-based investor who just sold Microsoft shares that you had bought six months ago. You had invested 10,000 euros to buy Microsoft shares for $120 per share; the exchange rate was $1.09 per euro. You sold the stock for $153 per share and converted the dollar proceeds into euro at the exchange rate of $1.00 per euro. First, determine the profit from this investment in euro terms. Second, compute the rate of return on your investment in euro terms. How much of the return is due to the exchange rate movement? (Do not round intermediate calculations. Enter your answer as a percent rounded to 1 decimal places.) Profit 13,898 Rate of return 39.0 % Rate of return due to exchange rate movement 9.01% Mr. James K. Silber, an avid international investor, just sold a share of Nstle, a Swiss firm, for SF5,140. The share was bought for SF4,660 a year ago. The exchange rate is SF1.90 per U.S. dollar now and was SF1.90 per dollar a year ago. Mr. Silber received SF132 as a cash dividend immediately before the share was sold. Suppose that Mr. Silber sold SF4,660, his principal investment amount, forward at the forward exchange rate of SF1.92 per dollar. How would this affect the dollar rate of return on this Swiss stock investment? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.) Rate of return %Step by Step Solution
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