Assume that you have invested $100,000 in British equities. When purchased, the stock's price and the exchange rate were £40 and £0.40/$1.00 respectively. At selling time, one year after purchase, they were £60 and £0.60/$1.00. If the investor had sold £40,000 forward at the forward exchange rate of £0.45/$1.00, the dollar rate of return would be: O 17.09% 7.58% O 13.90% O 22.22%
Assume that you have invested $100,000 in British equities. When purchased, the stock's price and the exchange rate were £40 and £0.40/$1.00 respectively. At selling time, one year after purchase, they were £60 and £0.60/$1.00. If the investor had sold £40,000 forward at the forward exchange rate of £0.45/$1.00, the dollar rate of return would be: O 17.09% 7.58% O 13.90% O 22.22%
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:Assume that you have invested $100,000 in British equities. When purchased, the stock's price and the exchange rate
were £40 and £0.40/$1.00 respectively. At selling time, one year after purchase, they were £60 and £0.60/$1.00. If the
investor had sold £40,000 forward at the forward exchange rate of £0.45/$1.00, the dollar rate of return would be:
O 17.09%
7.58%
O 13.90%
O 22.22%
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