Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Suppose Bronze Star Investment, Inc., a Cincinnati-based investment firm, invested $20,000 to buy 1,500 shares of Manx Corp., a United Kingdom-based auto parts firm, at
Suppose Bronze Star Investment, Inc., a Cincinnati-based investment firm, invested $20,000 to buy 1,500 shares of Manx Corp., a United Kingdom-based auto parts firm, at 8.88 a share at the exchange rate of $1.50 / 1 one year ago. If Manx Corp's shares appreciated (i.e. increased) by 21% after Bronze Star's purchase, what would be the total value of the 1,500 Manx Corp. shares purchased by Bronze Star one year ago right now in British pounds? 13,333.33 24,200.00 15,000.00 16,133.33 Question 5 2.86 pts Same facts as above: what would be the total value of the 1,500 Manx Corp. shares purchased by Bronze Star one year ago right now in U.S. dollars if the exchange rate between USD and GBP has remained the same at $1.50/ 1? $13,333.33 $24,200.00 $20,000.00 $16,133.33 How would your answer change from Question 5 if the exchange rate between USD and GBP has since changed to $1.20/ 1, or in the manner that the value of the British pound has depreciated significantly? $19,360.00 $18,256.46 $20,000.00 $20,640.00 If the exchange rate did change to $1.20 / 1 rather than staying the same at $1.50/ 1, would Bronze Star's investment result in a net gain or loss given that Bronze Star Investment, a U.S.-based firm, would ultimately need to convert its investments into dollars? What would be the percentage return? HINT: Percentage of return = (Current Value - Initial Value) / Initial Value. Bronze Star's investment would result in a net gain, and the percentage of return is 21.00%. Bronze Star's investment would result in a net loss, and the percentage of return is -3.20%. Bronze Star's investment would result na net gain, and the percentage of return is 3.20%. Bronze Star's investment would result n a net loss, and the percentage of return is -9.61%
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started