Suppose a U.S. investor wishes to invest in a British firm currently selling for £40 per share. The investor has $20,000 to invest, and the current exchange rate is $2/£. Required: a. How many shares can the investor purchase? (Round your answer to the nearest whole number.) Number of shares b. Fill in the table below for dollar-denominated rates of return after one year in each of the nine scenarios (three possible share prices. denominated in pounds times three possible exchange rates). (Round your percentage answers to 2 decimal places. Negative amounts should be indicated by a minus sign.) I 12 12 Price per Share (£) £ £ £ 33 38 43 Pound-Denominated Return (%) % % % Dollar-Denominated $1.60/£ % % % Return (%) for Year-End Exchange Rate $2.00 $2.40/£ % % % % % %

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
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Suppose a U.S. investor wishes to invest in a British firm currently selling for £40 per share. The investor has $20,000 to invest, and
the current exchange rate is $2/£.
Required:
a. How many shares can the investor purchase? (Round your answer to the nearest whole number.)
Number of shares
b. Fill in the table below for dollar-denominated rates of return after one year in each of the nine scenarios (three possible share prices
denominated in pounds times three possible exchange rates). (Round your percentage answers to 2 decimal places. Negative
amounts should be indicated by a minus sign.)
Price per
Share (£)
£
CH
WH
33
38
43
Pound-Denominated
Return (%)
%
%
%
Dollar-Denominated Return (%) for Year-End Exchange Rate
$1.60/£
$2.00/£
$2.40/£
%
%
%
%
%
%
%
%
Transcribed Image Text:es Suppose a U.S. investor wishes to invest in a British firm currently selling for £40 per share. The investor has $20,000 to invest, and the current exchange rate is $2/£. Required: a. How many shares can the investor purchase? (Round your answer to the nearest whole number.) Number of shares b. Fill in the table below for dollar-denominated rates of return after one year in each of the nine scenarios (three possible share prices denominated in pounds times three possible exchange rates). (Round your percentage answers to 2 decimal places. Negative amounts should be indicated by a minus sign.) Price per Share (£) £ CH WH 33 38 43 Pound-Denominated Return (%) % % % Dollar-Denominated Return (%) for Year-End Exchange Rate $1.60/£ $2.00/£ $2.40/£ % % % % % % % %
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