Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Suppose you are a euro-based Italian Investor, and you are Investing 11,200 to buy shares of a British company at 50 per share. The

Suppose you are a euro-based Italian Investor, and you are Investing 11,200 to buy shares of a British 

Suppose you are a euro-based Italian Investor, and you are Investing 11,200 to buy shares of a British company at 50 per share. The exchange rate is 1.40 per pound. The stock pays a 1 dividend one year later, and you sell your shares for 54. The exchange rate has changed to 1.45 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 1.35 per pound, what is your euro rate of return on this Investment? Note: Enter your answer as a percent rounded to 2 decimal places. Answer is complete but not entirely correct. Pound rate of return Change in pound-euro exchange rate Euro rate of return on 11200 inverstment Euro rate of return on 8,000 forward sale 96 %6 96 96

Step by Step Solution

There are 3 Steps involved in it

Step: 1

Pound rate of return To calculate the pound rate of return we first need to calculate the capital ga... blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Spreadsheet Modeling And Decision Analysis A Practical Introduction To Management Science

Authors: Cliff T. Ragsdale

5th Edition

324656645, 324656637, 9780324656640, 978-0324656633

More Books

Students also viewed these Accounting questions