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George Robbins considers himself an aggressive investorHe's thinking about investing in some foreign securities and is looking at stocks in ( 1 ) Bayer AG
George Robbins considers himself an aggressive investorHe's thinking about investing in some foreign securities and is looking at stocks in Bayer AG the big German chemical and healthcare firm, and Swisscom AG the Swiss telecommunications company Bayer AGwhich trades on the Frankfurt Exchange, is currently priced at euros per share. It pays annual dividends of euro per shareRobbins expects the stock to climb to euro per share over the next months. The current exchange rate is USbut that's expected to rise to The other companySwisscom, trades on the Zurich Exchange and is currently priced at Swiss francs per share. The stock pays annual dividends of Sf per share. Its share price is expected to go up to Sf within a yearAt current exchange rates, Sf is worth $ US but that's expected to go to by the end of the year holding period a Ignoring the currency effect, which of the two stocks promises the higher total return in its local currency Based on this information which of the two stocks looks like the better investment? b Which of the two stocks has the better total return in US dollars? Did currency exchange rates affect their returns in any way? Do you still want to stick with the same stock you selected in part a Explain with the same
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