Suppose a U.S. investor wishes to invest in a British firm currently selling for £40 per share. The investor has $10,000 to invest, and the current exchange rate is $2 per £. Suppose now the investor also sells forward £5,000 at a forward exchange rate of $2.10 per £. Required: Calculate the dollar-denominated returns for each scenario. Note: Round your percentage answers to 2 decimal places. Negative amounts should be indicated by a minus sign. Price per Share (£) Rate of Return (%) at Given Exchange Rate Exchange Rate $1.80 per ₤ $2.00 per ₤ $2.20 per £ £ 41 35 % % % £ 42 40 % % כי £ 45 % % di di %
Suppose a U.S. investor wishes to invest in a British firm currently selling for £40 per share. The investor has $10,000 to invest, and the current exchange rate is $2 per £. Suppose now the investor also sells forward £5,000 at a forward exchange rate of $2.10 per £. Required: Calculate the dollar-denominated returns for each scenario. Note: Round your percentage answers to 2 decimal places. Negative amounts should be indicated by a minus sign. Price per Share (£) Rate of Return (%) at Given Exchange Rate Exchange Rate $1.80 per ₤ $2.00 per ₤ $2.20 per £ £ 41 35 % % % £ 42 40 % % כי £ 45 % % di di %
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:Suppose a U.S. investor wishes to invest in a British firm currently selling for £40 per share. The investor has $10,000 to invest, and the
current exchange rate is $2 per £.
Suppose now the investor also sells forward £5,000 at a forward exchange rate of $2.10 per £.
Required:
Calculate the dollar-denominated returns for each scenario.
Note: Round your percentage answers to 2 decimal places. Negative amounts should be indicated by a minus sign.
Price per
Share (£)
Rate of Return (%) at Given Exchange Rate
Exchange Rate
$1.80 per ₤
$2.00 per ₤
$2.20 per £
£
41
35
%
%
%
£
42
40
%
%
כי
£
45
%
%
di di
%
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