Consider an Australian investor who borrows money in pounds from a UK bank at an interest rate of 3.9 per cent, in order to buy Australian shares. After one year, the shares have increased in price by 5 per cent, while the Australian dollar has appreciated against the pound by 4 per cent. If the investor then sells the shares and repays the loan and interest, what is the approximate net gain or loss expressed as a percentage of the original amount borrowed? (Assume the shares have paid no dividends.) 1.1 per cent O 5.1 per cent O-2.9 per cent O 12.9 per cent
Consider an Australian investor who borrows money in pounds from a UK bank at an interest rate of 3.9 per cent, in order to buy Australian shares. After one year, the shares have increased in price by 5 per cent, while the Australian dollar has appreciated against the pound by 4 per cent. If the investor then sells the shares and repays the loan and interest, what is the approximate net gain or loss expressed as a percentage of the original amount borrowed? (Assume the shares have paid no dividends.) 1.1 per cent O 5.1 per cent O-2.9 per cent O 12.9 per cent
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:Consider an Australian investor who borrows money in pounds from a UK
bank at an interest rate of 3.9 per cent, in order to buy Australian shares.
After one year, the shares have increased in price by 5 per cent, while the
Australian dollar has appreciated against the pound by 4 per cent.
If the investor then sells the shares and repays the loan and interest, what is
the approximate net gain or loss expressed as a percentage of the original
amount borrowed? (Assume the shares have paid no dividends.)
1.1 per cent
O 5.1 per cent
O-2.9 per cent
O 12.9 per cent
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