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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 euro-based Italian investor, and you are investing 11,600 to buy shares of a British company at 50 per share. The exchange rate is 1.45 per pound. The stock pays a 1 dividend one year later, and you sell your shares for 53. The exchange rate has changed to 1.50 per pound at the time of your sale. What is your pound rate of return on this investment and the change in pound-euro exchange rate? What is your euro rate of return? If you had agreed at the outset to sell 8,000 forward at the rate of 1.36 per pound, what is your euro rate of return on this investment?

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