Problem 4: Currency fluctuations and rates of return (30 points)

Assume you invest in the European Equity Market and have a 15% return (quoted in Euros).

1. If during this period the euro appreciated by 10% against the dollar, what would be your actual return, translated into United States dollars?

2. What if the euro declined by 10% against the dollar, what would your actual return be, translated into dollars?