(a) To calculate: The number of shares that an investor can purchase by investing $ 10000 in a British firm when the rate of exchange is $ 2 / pound Introduction: For investing in a British firm, investor of U.S. has to change its funds into the pound and then should compute the number of shares which he can invest in the firm.

Question

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Answer 1

Question

Chapter 19, Problem 3PS

Summary Introduction

(a)

To calculate:

The number of shares that an investor can purchase by investing $10000 in a British firm when the rate of exchange is $2/pound

Introduction:

For investing in a British firm, investor of U.S. has to change its funds into the pound and then should compute the number of shares which he can invest in the firm.

Expert Solution

Answer to Problem 3PS

The number of shares that can be purchased by investor in British firm is 125 shares .

Explanation of Solution

Given:

Current price per share=Pound 40 per shareTotal investment=$10000Rate of exchange=$2/pound

To calculate total number of shares, first total investment given in dollars should be converted to Euro which is calculated on the basis of Rate of Exchange and then, the total investment should be divided with current price per share.

Investment value in pound=$10000$2=Pound 5000

Number of shares=Pound 5000Pound 40=125 shares

Thus, number of shares that can be purchased is 125 shares .

Summary Introduction

(b)

To calculate:

The rates of return in dollar-denominated after one year in different scenarios and pound-denominated return.

Introduction:

For investing in a British firm, investor of U.S. has to change its funds into the pound and then should compute the number of shares which he can invest in the firm.

Expert Solution

Answer to Problem 3PS

Below table highlights the values for all nine cases:

Per share price (£)	Pound-Denominated Return (%)	Dollar-Denominated Return (%) for year-end exchange Rate
		$1.80/£	$2.00/£	$2.20/£
£ 35	−12.5%	−21.25%	−12.5%	−3.75%
£ 40	0.0%	−10.00%	0.00%	10.00%
£ 45	12.5%	1.25%	12.5%	23.75%

Explanation of Solution

Given:

Current price per share=Pound 40 per shareTotal investment=$10000Rate of exchange=$2/pound

Let's first calculate the pound-denominated return and for that, the following formula is used:

Pound-denominated return=Number of shares Current price−Base priceInitial investment in Pound

By using the above formula, Pound-denominated return is computed as follows:

Per share price (£)	Pound-Denominated Return (%)

£35	Return=125 £35−£40£5000 =£4375−£5000£5000 =−12.5%
£40	Return=125 £40−£40£5000 =£5000−£5000£5000 =0.00%
£45	Return=125 £45−£40£5000 =£5625−£5000£5000 =12.5%

Now, calculate the dollar-denominated return and for that, the following formula is used:

Dollar-denominated return=Number of shares Current price×new rate − Base price×base rate Initial investment in Dollar

By using the above formula, Dollar-denominated return is computed as follows:

Per share price (£)	Dollar-Denominated Return (%) for year-end exchange Rate
	$1.80/£	$2.00/£	$2.20/£
£35	Return=$7875−$10000$10000 =−21.25%	Return=$8750−$10000$10000 =−12.5%	Return=$9625−$10000$10000 =−3.75%
£40	Return=$9000−$10000$10000 =−10%	Return=$10000−$10000$10000 =0.00%	Return=$11000−$10000$10000 =10%
£45	Return=$10125−$10000$10000 =1.25%	Return=$11250−$10000$10000 =12.5%	Return=$12375−$10000$10000 =23.75%

Summary Introduction

(c)

To calculate:

The situation in which the dollar-denominated return will be equal to the pound-denominated return.

Introduction:

For investing in a British firm, investor of U.S. has to change its funds into the pound and then should compute the number of shares which he can invest in the firm.

Expert Solution

Answer to Problem 3PS

The situation is when there will be no change in the exchange rates.

Explanation of Solution

Given:

Current price per share=Pound 40 per shareTotal investment=$10000Rate of exchange=$2/pound

The dollar denomination returns will be equal to the pound denomination return when there is no change over the exchange rate in one year even if the price of the share changes.

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Answer 2

Question

Chapter 19, Problem 3PS

Summary Introduction

(a)

To calculate:

The number of shares that an investor can purchase by investing $10000 in a British firm when the rate of exchange is $2/pound

Introduction:

For investing in a British firm, investor of U.S. has to change its funds into the pound and then should compute the number of shares which he can invest in the firm.

Expert Solution

Answer to Problem 3PS

The number of shares that can be purchased by investor in British firm is 125 shares .

Explanation of Solution

Given:

Current price per share=Pound 40 per shareTotal investment=$10000Rate of exchange=$2/pound

To calculate total number of shares, first total investment given in dollars should be converted to Euro which is calculated on the basis of Rate of Exchange and then, the total investment should be divided with current price per share.

Investment value in pound=$10000$2=Pound 5000

Number of shares=Pound 5000Pound 40=125 shares

Thus, number of shares that can be purchased is 125 shares .

Summary Introduction

(b)

To calculate:

The rates of return in dollar-denominated after one year in different scenarios and pound-denominated return.

Introduction:

For investing in a British firm, investor of U.S. has to change its funds into the pound and then should compute the number of shares which he can invest in the firm.

Expert Solution

Answer to Problem 3PS

Below table highlights the values for all nine cases:

Per share price (£)	Pound-Denominated Return (%)	Dollar-Denominated Return (%) for year-end exchange Rate
		$1.80/£	$2.00/£	$2.20/£
£ 35	−12.5%	−21.25%	−12.5%	−3.75%
£ 40	0.0%	−10.00%	0.00%	10.00%
£ 45	12.5%	1.25%	12.5%	23.75%

Explanation of Solution

Given:

Current price per share=Pound 40 per shareTotal investment=$10000Rate of exchange=$2/pound

Let's first calculate the pound-denominated return and for that, the following formula is used:

Pound-denominated return=Number of shares Current price−Base priceInitial investment in Pound

By using the above formula, Pound-denominated return is computed as follows:

Per share price (£)	Pound-Denominated Return (%)

£35	Return=125 £35−£40£5000 =£4375−£5000£5000 =−12.5%
£40	Return=125 £40−£40£5000 =£5000−£5000£5000 =0.00%
£45	Return=125 £45−£40£5000 =£5625−£5000£5000 =12.5%

Now, calculate the dollar-denominated return and for that, the following formula is used:

Dollar-denominated return=Number of shares Current price×new rate − Base price×base rate Initial investment in Dollar

By using the above formula, Dollar-denominated return is computed as follows:

Per share price (£)	Dollar-Denominated Return (%) for year-end exchange Rate
	$1.80/£	$2.00/£	$2.20/£
£35	Return=$7875−$10000$10000 =−21.25%	Return=$8750−$10000$10000 =−12.5%	Return=$9625−$10000$10000 =−3.75%
£40	Return=$9000−$10000$10000 =−10%	Return=$10000−$10000$10000 =0.00%	Return=$11000−$10000$10000 =10%
£45	Return=$10125−$10000$10000 =1.25%	Return=$11250−$10000$10000 =12.5%	Return=$12375−$10000$10000 =23.75%

Summary Introduction

(c)

To calculate:

The situation in which the dollar-denominated return will be equal to the pound-denominated return.

Introduction:

For investing in a British firm, investor of U.S. has to change its funds into the pound and then should compute the number of shares which he can invest in the firm.

Expert Solution

Answer to Problem 3PS

The situation is when there will be no change in the exchange rates.

Explanation of Solution

Given:

Current price per share=Pound 40 per shareTotal investment=$10000Rate of exchange=$2/pound

The dollar denomination returns will be equal to the pound denomination return when there is no change over the exchange rate in one year even if the price of the share changes.

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Answer 3

Question

Chapter 19, Problem 3PS

Summary Introduction

(a)

To calculate:

The number of shares that an investor can purchase by investing $10000 in a British firm when the rate of exchange is $2/pound

Introduction:

For investing in a British firm, investor of U.S. has to change its funds into the pound and then should compute the number of shares which he can invest in the firm.

Expert Solution

Answer to Problem 3PS

The number of shares that can be purchased by investor in British firm is 125 shares .

Explanation of Solution

Given:

Current price per share=Pound 40 per shareTotal investment=$10000Rate of exchange=$2/pound

To calculate total number of shares, first total investment given in dollars should be converted to Euro which is calculated on the basis of Rate of Exchange and then, the total investment should be divided with current price per share.

Investment value in pound=$10000$2=Pound 5000

Number of shares=Pound 5000Pound 40=125 shares

Thus, number of shares that can be purchased is 125 shares .

Summary Introduction

(b)

To calculate:

The rates of return in dollar-denominated after one year in different scenarios and pound-denominated return.

Introduction:

For investing in a British firm, investor of U.S. has to change its funds into the pound and then should compute the number of shares which he can invest in the firm.

Expert Solution

Answer to Problem 3PS

Below table highlights the values for all nine cases:

Per share price (£)	Pound-Denominated Return (%)	Dollar-Denominated Return (%) for year-end exchange Rate
		$1.80/£	$2.00/£	$2.20/£
£ 35	−12.5%	−21.25%	−12.5%	−3.75%
£ 40	0.0%	−10.00%	0.00%	10.00%
£ 45	12.5%	1.25%	12.5%	23.75%

Explanation of Solution

Given:

Current price per share=Pound 40 per shareTotal investment=$10000Rate of exchange=$2/pound

Let's first calculate the pound-denominated return and for that, the following formula is used:

Pound-denominated return=Number of shares Current price−Base priceInitial investment in Pound

By using the above formula, Pound-denominated return is computed as follows:

Per share price (£)	Pound-Denominated Return (%)

£35	Return=125 £35−£40£5000 =£4375−£5000£5000 =−12.5%
£40	Return=125 £40−£40£5000 =£5000−£5000£5000 =0.00%
£45	Return=125 £45−£40£5000 =£5625−£5000£5000 =12.5%

Now, calculate the dollar-denominated return and for that, the following formula is used:

Dollar-denominated return=Number of shares Current price×new rate − Base price×base rate Initial investment in Dollar

By using the above formula, Dollar-denominated return is computed as follows:

Per share price (£)	Dollar-Denominated Return (%) for year-end exchange Rate
	$1.80/£	$2.00/£	$2.20/£
£35	Return=$7875−$10000$10000 =−21.25%	Return=$8750−$10000$10000 =−12.5%	Return=$9625−$10000$10000 =−3.75%
£40	Return=$9000−$10000$10000 =−10%	Return=$10000−$10000$10000 =0.00%	Return=$11000−$10000$10000 =10%
£45	Return=$10125−$10000$10000 =1.25%	Return=$11250−$10000$10000 =12.5%	Return=$12375−$10000$10000 =23.75%

Summary Introduction

(c)

To calculate:

The situation in which the dollar-denominated return will be equal to the pound-denominated return.

Introduction:

For investing in a British firm, investor of U.S. has to change its funds into the pound and then should compute the number of shares which he can invest in the firm.

Expert Solution

Answer to Problem 3PS

The situation is when there will be no change in the exchange rates.

Explanation of Solution

Given:

Current price per share=Pound 40 per shareTotal investment=$10000Rate of exchange=$2/pound

The dollar denomination returns will be equal to the pound denomination return when there is no change over the exchange rate in one year even if the price of the share changes.

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Answer 4

Question

Chapter 19, Problem 3PS

Summary Introduction

(a)

To calculate:

The number of shares that an investor can purchase by investing $10000 in a British firm when the rate of exchange is $2/pound

Introduction:

For investing in a British firm, investor of U.S. has to change its funds into the pound and then should compute the number of shares which he can invest in the firm.

Expert Solution

Answer to Problem 3PS

The number of shares that can be purchased by investor in British firm is 125 shares .

Explanation of Solution

Given:

Current price per share=Pound 40 per shareTotal investment=$10000Rate of exchange=$2/pound

To calculate total number of shares, first total investment given in dollars should be converted to Euro which is calculated on the basis of Rate of Exchange and then, the total investment should be divided with current price per share.

Investment value in pound=$10000$2=Pound 5000

Number of shares=Pound 5000Pound 40=125 shares

Thus, number of shares that can be purchased is 125 shares .

Summary Introduction

(b)

To calculate:

The rates of return in dollar-denominated after one year in different scenarios and pound-denominated return.

Introduction:

For investing in a British firm, investor of U.S. has to change its funds into the pound and then should compute the number of shares which he can invest in the firm.

Expert Solution

Answer to Problem 3PS

Below table highlights the values for all nine cases:

Per share price (£)	Pound-Denominated Return (%)	Dollar-Denominated Return (%) for year-end exchange Rate
		$1.80/£	$2.00/£	$2.20/£
£ 35	−12.5%	−21.25%	−12.5%	−3.75%
£ 40	0.0%	−10.00%	0.00%	10.00%
£ 45	12.5%	1.25%	12.5%	23.75%

Explanation of Solution

Given:

Current price per share=Pound 40 per shareTotal investment=$10000Rate of exchange=$2/pound

Let's first calculate the pound-denominated return and for that, the following formula is used:

Pound-denominated return=Number of shares Current price−Base priceInitial investment in Pound

By using the above formula, Pound-denominated return is computed as follows:

Per share price (£)	Pound-Denominated Return (%)

£35	Return=125 £35−£40£5000 =£4375−£5000£5000 =−12.5%
£40	Return=125 £40−£40£5000 =£5000−£5000£5000 =0.00%
£45	Return=125 £45−£40£5000 =£5625−£5000£5000 =12.5%

Now, calculate the dollar-denominated return and for that, the following formula is used:

Dollar-denominated return=Number of shares Current price×new rate − Base price×base rate Initial investment in Dollar

By using the above formula, Dollar-denominated return is computed as follows:

Per share price (£)	Dollar-Denominated Return (%) for year-end exchange Rate
	$1.80/£	$2.00/£	$2.20/£
£35	Return=$7875−$10000$10000 =−21.25%	Return=$8750−$10000$10000 =−12.5%	Return=$9625−$10000$10000 =−3.75%
£40	Return=$9000−$10000$10000 =−10%	Return=$10000−$10000$10000 =0.00%	Return=$11000−$10000$10000 =10%
£45	Return=$10125−$10000$10000 =1.25%	Return=$11250−$10000$10000 =12.5%	Return=$12375−$10000$10000 =23.75%

Summary Introduction

(c)

To calculate:

The situation in which the dollar-denominated return will be equal to the pound-denominated return.

Introduction:

For investing in a British firm, investor of U.S. has to change its funds into the pound and then should compute the number of shares which he can invest in the firm.

Expert Solution

Answer to Problem 3PS

The situation is when there will be no change in the exchange rates.

Explanation of Solution

Given:

Current price per share=Pound 40 per shareTotal investment=$10000Rate of exchange=$2/pound

The dollar denomination returns will be equal to the pound denomination return when there is no change over the exchange rate in one year even if the price of the share changes.

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Answer 5

Chapter 19, Problem 3PS

Summary Introduction

(a)

To calculate:

The number of shares that an investor can purchase by investing $10000 in a British firm when the rate of exchange is $2/pound

Introduction:

For investing in a British firm, investor of U.S. has to change its funds into the pound and then should compute the number of shares which he can invest in the firm.

Expert Solution

Answer to Problem 3PS

The number of shares that can be purchased by investor in British firm is 125 shares .

Explanation of Solution

Given:

Current price per share=Pound 40 per shareTotal investment=$10000Rate of exchange=$2/pound

To calculate total number of shares, first total investment given in dollars should be converted to Euro which is calculated on the basis of Rate of Exchange and then, the total investment should be divided with current price per share.

Investment value in pound=$10000$2=Pound 5000

Number of shares=Pound 5000Pound 40=125 shares

Thus, number of shares that can be purchased is 125 shares .

Summary Introduction

(b)

To calculate:

The rates of return in dollar-denominated after one year in different scenarios and pound-denominated return.

Introduction:

For investing in a British firm, investor of U.S. has to change its funds into the pound and then should compute the number of shares which he can invest in the firm.

Expert Solution

Answer to Problem 3PS

Below table highlights the values for all nine cases:

Per share price (£)	Pound-Denominated Return (%)	Dollar-Denominated Return (%) for year-end exchange Rate
		$1.80/£	$2.00/£	$2.20/£
£ 35	−12.5%	−21.25%	−12.5%	−3.75%
£ 40	0.0%	−10.00%	0.00%	10.00%
£ 45	12.5%	1.25%	12.5%	23.75%

Explanation of Solution

Given:

Current price per share=Pound 40 per shareTotal investment=$10000Rate of exchange=$2/pound

Let's first calculate the pound-denominated return and for that, the following formula is used:

Pound-denominated return=Number of shares Current price−Base priceInitial investment in Pound

By using the above formula, Pound-denominated return is computed as follows:

Per share price (£)	Pound-Denominated Return (%)

£35	Return=125 £35−£40£5000 =£4375−£5000£5000 =−12.5%
£40	Return=125 £40−£40£5000 =£5000−£5000£5000 =0.00%
£45	Return=125 £45−£40£5000 =£5625−£5000£5000 =12.5%

Now, calculate the dollar-denominated return and for that, the following formula is used:

Dollar-denominated return=Number of shares Current price×new rate − Base price×base rate Initial investment in Dollar

By using the above formula, Dollar-denominated return is computed as follows:

Per share price (£)	Dollar-Denominated Return (%) for year-end exchange Rate
	$1.80/£	$2.00/£	$2.20/£
£35	Return=$7875−$10000$10000 =−21.25%	Return=$8750−$10000$10000 =−12.5%	Return=$9625−$10000$10000 =−3.75%
£40	Return=$9000−$10000$10000 =−10%	Return=$10000−$10000$10000 =0.00%	Return=$11000−$10000$10000 =10%
£45	Return=$10125−$10000$10000 =1.25%	Return=$11250−$10000$10000 =12.5%	Return=$12375−$10000$10000 =23.75%

Summary Introduction

(c)

To calculate:

The situation in which the dollar-denominated return will be equal to the pound-denominated return.

Introduction:

For investing in a British firm, investor of U.S. has to change its funds into the pound and then should compute the number of shares which he can invest in the firm.

Expert Solution

Answer to Problem 3PS

The situation is when there will be no change in the exchange rates.

Explanation of Solution

Given:

Current price per share=Pound 40 per shareTotal investment=$10000Rate of exchange=$2/pound

The dollar denomination returns will be equal to the pound denomination return when there is no change over the exchange rate in one year even if the price of the share changes.

Answer 6

Chapter 19, Problem 3PS

Summary Introduction

(a)

To calculate:

The number of shares that an investor can purchase by investing $10000 in a British firm when the rate of exchange is $2/pound

Introduction:

For investing in a British firm, investor of U.S. has to change its funds into the pound and then should compute the number of shares which he can invest in the firm.

Expert Solution

Answer to Problem 3PS

The number of shares that can be purchased by investor in British firm is 125 shares .

Explanation of Solution

Given:

Current price per share=Pound 40 per shareTotal investment=$10000Rate of exchange=$2/pound

To calculate total number of shares, first total investment given in dollars should be converted to Euro which is calculated on the basis of Rate of Exchange and then, the total investment should be divided with current price per share.

Investment value in pound=$10000$2=Pound 5000

Number of shares=Pound 5000Pound 40=125 shares

Thus, number of shares that can be purchased is 125 shares .

Answer 7

Chapter 19, Problem 3PS

Summary Introduction

(a)

To calculate:

The number of shares that an investor can purchase by investing $10000 in a British firm when the rate of exchange is $2/pound

Introduction:

For investing in a British firm, investor of U.S. has to change its funds into the pound and then should compute the number of shares which he can invest in the firm.

Answer 8

Expert Solution

Answer to Problem 3PS

The number of shares that can be purchased by investor in British firm is 125 shares .

Answer 9

Expert Solution

Answer 10

Expert Solution

Answer 11

Expert Solution

Answer 12

Explanation of Solution

Given:

Current price per share=Pound 40 per shareTotal investment=$10000Rate of exchange=$2/pound

To calculate total number of shares, first total investment given in dollars should be converted to Euro which is calculated on the basis of Rate of Exchange and then, the total investment should be divided with current price per share.

Investment value in pound=$10000$2=Pound 5000

Number of shares=Pound 5000Pound 40=125 shares

Thus, number of shares that can be purchased is 125 shares .

Answer 13

Summary Introduction

(b)

To calculate:

The rates of return in dollar-denominated after one year in different scenarios and pound-denominated return.

Introduction:

For investing in a British firm, investor of U.S. has to change its funds into the pound and then should compute the number of shares which he can invest in the firm.

Expert Solution

Answer to Problem 3PS

Below table highlights the values for all nine cases:

Per share price (£)	Pound-Denominated Return (%)	Dollar-Denominated Return (%) for year-end exchange Rate
		$1.80/£	$2.00/£	$2.20/£
£ 35	−12.5%	−21.25%	−12.5%	−3.75%
£ 40	0.0%	−10.00%	0.00%	10.00%
£ 45	12.5%	1.25%	12.5%	23.75%

Explanation of Solution

Given:

Current price per share=Pound 40 per shareTotal investment=$10000Rate of exchange=$2/pound

Let's first calculate the pound-denominated return and for that, the following formula is used:

Pound-denominated return=Number of shares Current price−Base priceInitial investment in Pound

By using the above formula, Pound-denominated return is computed as follows:

Per share price (£)	Pound-Denominated Return (%)

£35	Return=125 £35−£40£5000 =£4375−£5000£5000 =−12.5%
£40	Return=125 £40−£40£5000 =£5000−£5000£5000 =0.00%
£45	Return=125 £45−£40£5000 =£5625−£5000£5000 =12.5%

Now, calculate the dollar-denominated return and for that, the following formula is used:

Dollar-denominated return=Number of shares Current price×new rate − Base price×base rate Initial investment in Dollar

By using the above formula, Dollar-denominated return is computed as follows:

Per share price (£)	Dollar-Denominated Return (%) for year-end exchange Rate
	$1.80/£	$2.00/£	$2.20/£
£35	Return=$7875−$10000$10000 =−21.25%	Return=$8750−$10000$10000 =−12.5%	Return=$9625−$10000$10000 =−3.75%
£40	Return=$9000−$10000$10000 =−10%	Return=$10000−$10000$10000 =0.00%	Return=$11000−$10000$10000 =10%
£45	Return=$10125−$10000$10000 =1.25%	Return=$11250−$10000$10000 =12.5%	Return=$12375−$10000$10000 =23.75%

Answer 14

Summary Introduction

(b)

To calculate:

The rates of return in dollar-denominated after one year in different scenarios and pound-denominated return.

Introduction:

For investing in a British firm, investor of U.S. has to change its funds into the pound and then should compute the number of shares which he can invest in the firm.

Answer 15

Expert Solution

Answer to Problem 3PS

Below table highlights the values for all nine cases:

Per share price (£)	Pound-Denominated Return (%)	Dollar-Denominated Return (%) for year-end exchange Rate
		$1.80/£	$2.00/£	$2.20/£
£ 35	−12.5%	−21.25%	−12.5%	−3.75%
£ 40	0.0%	−10.00%	0.00%	10.00%
£ 45	12.5%	1.25%	12.5%	23.75%

Answer 16

Expert Solution

Answer 17

Expert Solution

Answer 18

Expert Solution

Answer 19

Explanation of Solution

Given:

Current price per share=Pound 40 per shareTotal investment=$10000Rate of exchange=$2/pound

Let's first calculate the pound-denominated return and for that, the following formula is used:

Pound-denominated return=Number of shares Current price−Base priceInitial investment in Pound

By using the above formula, Pound-denominated return is computed as follows:

Per share price (£)	Pound-Denominated Return (%)

£35	Return=125 £35−£40£5000 =£4375−£5000£5000 =−12.5%
£40	Return=125 £40−£40£5000 =£5000−£5000£5000 =0.00%
£45	Return=125 £45−£40£5000 =£5625−£5000£5000 =12.5%

Now, calculate the dollar-denominated return and for that, the following formula is used:

Dollar-denominated return=Number of shares Current price×new rate − Base price×base rate Initial investment in Dollar

By using the above formula, Dollar-denominated return is computed as follows:

Per share price (£)	Dollar-Denominated Return (%) for year-end exchange Rate
	$1.80/£	$2.00/£	$2.20/£
£35	Return=$7875−$10000$10000 =−21.25%	Return=$8750−$10000$10000 =−12.5%	Return=$9625−$10000$10000 =−3.75%
£40	Return=$9000−$10000$10000 =−10%	Return=$10000−$10000$10000 =0.00%	Return=$11000−$10000$10000 =10%
£45	Return=$10125−$10000$10000 =1.25%	Return=$11250−$10000$10000 =12.5%	Return=$12375−$10000$10000 =23.75%

Answer 20

Summary Introduction

(c)

To calculate:

The situation in which the dollar-denominated return will be equal to the pound-denominated return.

Introduction:

For investing in a British firm, investor of U.S. has to change its funds into the pound and then should compute the number of shares which he can invest in the firm.

Expert Solution

Answer to Problem 3PS

The situation is when there will be no change in the exchange rates.

Explanation of Solution

Given:

Current price per share=Pound 40 per shareTotal investment=$10000Rate of exchange=$2/pound

The dollar denomination returns will be equal to the pound denomination return when there is no change over the exchange rate in one year even if the price of the share changes.

Answer 21

Summary Introduction

(c)

To calculate:

The situation in which the dollar-denominated return will be equal to the pound-denominated return.

Introduction:

For investing in a British firm, investor of U.S. has to change its funds into the pound and then should compute the number of shares which he can invest in the firm.

Answer 22

Expert Solution

Answer to Problem 3PS

The situation is when there will be no change in the exchange rates.

Answer 23

Expert Solution

Answer 24

Expert Solution

Answer 25

Expert Solution

Answer 26

Explanation of Solution

Given:

Current price per share=Pound 40 per shareTotal investment=$10000Rate of exchange=$2/pound

The dollar denomination returns will be equal to the pound denomination return when there is no change over the exchange rate in one year even if the price of the share changes.