Investment return. Introduction: Return: In financial context, return is seen as percentage that represents the profit in an investment.

Question

International investment returns Joe Martinez, a U.S. citizen living in Brownsville, Texas, invested in the common stock of Telmex, a Mexican corporation. He pur-chased 1,000 shares at 20.50 pesos per share. Twelve months later, he sold them at 24.75 pesos per share. He received no dividends during that time. a. What was Joe’s investment return (in percentage terms) for the year, on the basis of the peso value of the shares? b. The exchange rate for pesos was 9.21 pesos per US$1.00 at the time of the pur-chase. At the time of the sale, the exchange rate was 9.85 pesos per US$1.00. Translate the purchase and sale prices into US$. c. Calculate Joe’s investment return on the basis of the US$ value of the shares. d. Explain why the two returns are different. Which one is more important to Joe? Why

Answer 1

Question

Chapter 8, Problem 8.16P

a)

Summary Introduction

To discuss:

Investment return.

Introduction:

Return: In financial context, return is seen as percentage that represents the profit in an investment.

b)

Summary Introduction

To discuss:

Purchase price and sales price.

Introduction:

Return: In financial context, return is seen as percentage that represents the profit in an investment.

c)

Summary Introduction

To discuss:

Investment return.

Introduction:

Return: In financial context, return is seen as percentage that represents the profit in an investment.

d)

Summary Introduction

To discuss:

Reason for difference in returns.

Introduction:

Return: In financial context, return is seen as percentage that represents the profit in an investment.

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International investment returns Joe Martinez, a U.S. citizen living in Brownsville, Texas, invested in the common stock of Telmex, a Mexican corporation. He pur-chased 1,000 shares at 20.50 pesos per share. Twelve months later, he sold them at 24.75 pesos per share. He received no dividends during that time. a. What was Joe’s investment return (in percentage terms) for the year, on the basis of the peso value of the shares? b. The exchange rate for pesos was 9.21 pesos per US$1.00 at the time of the pur-chase. At the time of the sale, the exchange rate was 9.85 pesos per US$1.00. Translate the purchase and sale prices into US$. c. Calculate Joe’s investment return on the basis of the US$ value of the shares. d. Explain why the two returns are different. Which one is more important to Joe? Why

QUESTION 11 Hiro has $10,000 to invest in the foreign-exchange market, with a focus on U.S. dollars (USD), euros (EUR), and Japanese yen (JPY). Calculate the potential arbitrage profit or loss Hiro could realize from the following sequence: USD to EUR, EUR to JPY, and JPY back to USD. b) Assess Hiro's arbitrage profit or loss from converting USD to JPY, then JPY to EUR, and finally EUR back to USD. c) Examine the current exchange rates between the USD, EUR, and JPY to determine if there are any arbitrage opportunities available with these currencies. Exchange rate USD EUR JPY USD 1.00000 0.78230 81.200 EUR 1.27830 1.00000 103.796 JPY 0.01232 0.00963 1.000

Question 2 Lydia is a market trader from London wants to make a profitable inter market arbitrage. Based on the following quotes how could Lydia achieve his objectives using an initial investment of £800,000. Calculate Jack's profit. EUR/USD: 1.1837 EUR/GBP: 0.7231 GBP/USD: 1.6388

Answer 2

Question

Chapter 8, Problem 8.16P

a)

Summary Introduction

To discuss:

Investment return.

Introduction:

Return: In financial context, return is seen as percentage that represents the profit in an investment.

b)

Summary Introduction

To discuss:

Purchase price and sales price.

Introduction:

Return: In financial context, return is seen as percentage that represents the profit in an investment.

c)

Summary Introduction

To discuss:

Investment return.

Introduction:

Return: In financial context, return is seen as percentage that represents the profit in an investment.

d)

Summary Introduction

To discuss:

Reason for difference in returns.

Introduction:

Return: In financial context, return is seen as percentage that represents the profit in an investment.

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Answer 3

Question

Chapter 8, Problem 8.16P

a)

Summary Introduction

To discuss:

Investment return.

Introduction:

Return: In financial context, return is seen as percentage that represents the profit in an investment.

b)

Summary Introduction

To discuss:

Purchase price and sales price.

Introduction:

Return: In financial context, return is seen as percentage that represents the profit in an investment.

c)

Summary Introduction

To discuss:

Investment return.

Introduction:

Return: In financial context, return is seen as percentage that represents the profit in an investment.

d)

Summary Introduction

To discuss:

Reason for difference in returns.

Introduction:

Return: In financial context, return is seen as percentage that represents the profit in an investment.

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Answer 4

Question

Chapter 8, Problem 8.16P

a)

Summary Introduction

To discuss:

Investment return.

Introduction:

Return: In financial context, return is seen as percentage that represents the profit in an investment.

b)

Summary Introduction

To discuss:

Purchase price and sales price.

Introduction:

Return: In financial context, return is seen as percentage that represents the profit in an investment.

c)

Summary Introduction

To discuss:

Investment return.

Introduction:

Return: In financial context, return is seen as percentage that represents the profit in an investment.

d)

Summary Introduction

To discuss:

Reason for difference in returns.

Introduction:

Return: In financial context, return is seen as percentage that represents the profit in an investment.

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Answer 5

Chapter 8, Problem 8.16P

a)

Summary Introduction

To discuss:

Investment return.

Introduction:

Return: In financial context, return is seen as percentage that represents the profit in an investment.

b)

Summary Introduction

To discuss:

Purchase price and sales price.

Introduction:

Return: In financial context, return is seen as percentage that represents the profit in an investment.

c)

Summary Introduction

To discuss:

Investment return.

Introduction:

Return: In financial context, return is seen as percentage that represents the profit in an investment.

d)

Summary Introduction

To discuss:

Reason for difference in returns.

Introduction:

Return: In financial context, return is seen as percentage that represents the profit in an investment.

Answer 6

Chapter 8, Problem 8.16P

a)

Summary Introduction

To discuss:

Investment return.

Introduction:

Return: In financial context, return is seen as percentage that represents the profit in an investment.

Answer 7

Chapter 8, Problem 8.16P

a)

Summary Introduction

To discuss:

Investment return.

Introduction:

Return: In financial context, return is seen as percentage that represents the profit in an investment.

Answer 8

b)

Summary Introduction

To discuss:

Purchase price and sales price.

Introduction:

Return: In financial context, return is seen as percentage that represents the profit in an investment.

Answer 9

b)

Summary Introduction

To discuss:

Purchase price and sales price.

Introduction:

Return: In financial context, return is seen as percentage that represents the profit in an investment.

Answer 10

c)

Summary Introduction

To discuss:

Investment return.

Introduction:

Return: In financial context, return is seen as percentage that represents the profit in an investment.

Answer 11

c)

Summary Introduction

To discuss:

Investment return.

Introduction:

Return: In financial context, return is seen as percentage that represents the profit in an investment.

Answer 12

d)

Summary Introduction

To discuss:

Reason for difference in returns.

Introduction:

Return: In financial context, return is seen as percentage that represents the profit in an investment.

Answer 13

d)

Summary Introduction

To discuss:

Reason for difference in returns.

Introduction:

Return: In financial context, return is seen as percentage that represents the profit in an investment.

Answer 14

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Answer 15

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Ch. 8.1 - Prob. 1FOE Ch. 8.1 - What is risk in the context of financial decision...Ch. 8.1 - Prob. 8.2RQ Ch. 8.1 - Prob. 8.3RQ Ch. 8.2 - Explain how the range is used in scenario...Ch. 8.2 - Prob. 8.5RQ Ch. 8.2 - Prob. 8.6RQ Ch. 8.2 - What does the coefficient of variation reveal...Ch. 8.3 - What is an efficient portfolio? How can the return...Ch. 8.3 - Prob. 8.9RQ

Investment return. Introduction: Return: In financial context, return is seen as percentage that represents the profit in an investment.

Solution Summary: The author explains that in financial con, return is seen as percentage that represents the profit in an investment.

To discuss:

Investment return.

Introduction:

Return: In financial context, return is seen as percentage that represents the profit in an investment.

To discuss:

Purchase price and sales price.

Introduction:

Return: In financial context, return is seen as percentage that represents the profit in an investment.

To discuss:

Investment return.

Introduction:

Return: In financial context, return is seen as percentage that represents the profit in an investment.

To discuss:

Reason for difference in returns.

Introduction:

Return: In financial context, return is seen as percentage that represents the profit in an investment.

Chapter 8 Solutions

Investment return. Introduction: Return: In financial context, return is seen as percentage that represents the profit in an investment.

Solution Summary: The author explains that in financial con, return is seen as percentage that represents the profit in an investment.

To discuss: Investment return. Introduction: Return: In financial context, return is seen as percentage that represents the profit in an investment.

To discuss: Purchase price and sales price. Introduction: Return: In financial context, return is seen as percentage that represents the profit in an investment.

To discuss: Investment return. Introduction: Return: In financial context, return is seen as percentage that represents the profit in an investment.

To discuss: Reason for difference in returns. Introduction: Return: In financial context, return is seen as percentage that represents the profit in an investment.

Chapter 8 Solutions

To discuss:

Investment return.

Introduction:

Return: In financial context, return is seen as percentage that represents the profit in an investment.

To discuss:

Purchase price and sales price.

Introduction:

Return: In financial context, return is seen as percentage that represents the profit in an investment.

To discuss:

Investment return.

Introduction:

Return: In financial context, return is seen as percentage that represents the profit in an investment.

To discuss:

Reason for difference in returns.

Introduction:

Return: In financial context, return is seen as percentage that represents the profit in an investment.