Question
The ABC Companys share (based in Canada) is priced at C$ 400 per share. The spot rate of the peso is US$0.76. You expect that
The ABC Companys share (based in Canada) is priced at C$ 400 per share. The spot rate of the peso is US$0.76. You expect that the stock price of ABC Company will increase by 62% next year. You also expect that the Canadian Dollar will depreciate against the U.S. dollar by 57% during the next year. You bought 100 share of ABC traded on the Canadian stock exchange. ABC company paid a dividend of C$25 per share before you sold the share at the end of the year. What is the US dollar cash you will receive after one year? What is your rate of return in Canadian Dollar? What is your rate of return in US Dollar?
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