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Suppose you are a euro - based Italian investor, and you are investing 1 1 , 6 0 0 to buy shares of a British
Suppose you are a eurobased Italian investor, and you are investing to buy shares of a British company at per share. The exchange rate is per pound. The stock pays a dividend one year later, and you sell your shares for The exchange rate has changed to per pound at the time of your sale. What is your pound rate of return on this investment and the change in poundeuro exchange rate? What is your euro rate of return? If you had agreed at the outset to sell forward at the rate of per pound, what is your euro rate of return on this investment?
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