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Suppose a U.S. investor wishes to invest in a British firm currently selling for £100 per share. The investor has $24,000 to invest, and the current exchange rate is $2/£. Suppose now the investor also sells forward £12,000 at a forward exchange rate of $1.90/£. Calculate the dollar-denominated returns for each scenario. (Round your answers to 2 decimal places. Negative amounts should be indicated by a minus sign.) Rate of Return (%) at Given Exchange Rate Price per Share (£) Exchange Rate: $1.80/£ $2.00/£ $2.20/£ % % % % % % 95 % 100 105 %

Suppose a U.S. investor wishes to invest in a British firm currently selling for £100 per share. The investor has $24,000 to invest, and the current exchange rate is $2/£. Suppose now the investor also sells forward £12,000 at a forward exchange rate of $1.90/£. Calculate the dollar-denominated returns for each scenario. (Round your answers to 2 decimal places. Negative amounts should be indicated by a minus sign.) Rate of Return (%) at Given Exchange Rate Price per Share (£) Exchange Rate: $1.80/£ $2.00/£ $2.20/£ % % % % % % 95 % 100 105 %

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Problem 25-5 Suppose a U.S. investor wishes to invest in a British firm currently selling for £100 per share. The investor has $24,000 to invest, and the current exchange rate is $2/£. Suppose now the investor also sells forward £12,000 at a forward exchange rate of $1.90/£. Calculate the dollar-denominated returns for each scenario. (Round your answers to 2 decimal places. Negative amounts should be indicated by a minus sign.) Rate of Return (%) at Given Exchange Rate Price per Share (£) Exchange Rate: $1.80/£ $2.00/£ $2.20/£ % % £ 95 % % £ 100 % % £ 105 % %
Transcribed Image Text:Problem 25-5 Suppose a U.S. investor wishes to invest in a British firm currently selling for £100 per share. The investor has $24,000 to invest, and the current exchange rate is $2/£. Suppose now the investor also sells forward £12,000 at a forward exchange rate of $1.90/£. Calculate the dollar-denominated returns for each scenario. (Round your answers to 2 decimal places. Negative amounts should be indicated by a minus sign.) Rate of Return (%) at Given Exchange Rate Price per Share (£) Exchange Rate: $1.80/£ $2.00/£ $2.20/£ % % £ 95 % % £ 100 % % £ 105 % %
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