(a) James is US investor, just sold a share of BMW company from German with €5,650. The share was bought for €4950 a year ago. The exchange rate is €0.84 per dollar now and was €0.85 per dollar a year ago. James received €90 as a cash dividend immediately before the share was sold. Compute the rate of return in this investment in terms of U.S dollars. (b) George is an investor from Canada. He owns one bond which located in London Stock Exchange (LSE). The bond has issued with coupon rate of 10 percent and face value at CND1,000. At the end of the year the bond was priced at CND1,100. Because of the bond will mature in one year, the exchange rate goes from $1.2443/CND to $1.3545/CND. Determine the rate of return in dollar terms with total dividend is CND25.
(a) James is US investor, just sold a share of BMW company from German with €5,650. The share was bought for €4950 a year ago. The exchange rate is €0.84 per dollar now and was €0.85 per dollar a year ago. James received €90 as a cash dividend immediately before the share was sold. Compute the rate of return in this investment in terms of U.S dollars. (b) George is an investor from Canada. He owns one bond which located in London Stock Exchange (LSE). The bond has issued with coupon rate of 10 percent and face value at CND1,000. At the end of the year the bond was priced at CND1,100. Because of the bond will mature in one year, the exchange rate goes from $1.2443/CND to $1.3545/CND. Determine the rate of return in dollar terms with total dividend is CND25.
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Transcribed Image Text:(a) James is US investor, just sold a share of BMW company from German with
€5,650. The share was bought for €4950 a year ago. The exchange rate is €0.84
per dollar now and was €0.85 per dollar a year ago. James received €90 as a cash
dividend immediately before the share was sold. Compute the rate of return in this
investment in terms of U.S dollars.
(b) George is an investor from Canada. He owns one bond which located in
London Stock Exchange (LSE). The bond has issued with coupon rate of 10
percent and face value at CND1,000. At the end of the year the bond was priced at
CND1,100. Because of the bond will mature in one year, the exchange rate goes
from $1.2443/CND to $1.3545/CND. Determine the rate of return in dollar terms
with total dividend is CND25.
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