Question
Suppose you are a euro-based investor who just sold Microsoft shares that you had bought six months ago. You had invested 10,000 euros to buy
Suppose you are a euro-based investor who just sold Microsoft shares that you had bought six months ago. You had invested 10,000 euros to buy Microsoft shares for $120 per share; the exchange rate was $1.09 per euro. You sold the stock for $153 per share and converted the dollar proceeds into euro at the exchange rate of $1.00 per euro. First, determine the profit from this investment in euro terms. Second, compute the rate of return on your investment in euro terms. How much of the return is due to the exchange rate movement? (Do not round intermediate calculations. Enter your answer as a percent rounded to 1 decimal places.)
profit
rate of return
rate of return due to exchange rate movement
To solve the problems in the quiz, they ask you to use the approximate formula: Ri$ = Ri + ei. Please follow this formula to get the correct answers.
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