A French institutional investor wishes to decrease its exposure to Taiwan. It is interested in selling 20,000 shares of a particular Taiwanese firm that is currently in its portfolio. This firm trades on the Taiwan Stock Exchange. A Taiwan - based broker quotes the Taiwan dollar (TWD) price of the shares of this firm as

International Financial Management
14th Edition
ISBN:9780357130698
Author:Madura
Publisher:Madura
Chapter7: International Arbitrage And Interest Rate Parity
Section: Chapter Questions
Problem 2BIC
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A French institutional investor wishes to decrease its
exposure to Taiwan. It is interested in selling 20,000
shares of a particular Taiwanese firm that is currently in
its portfolio. This firm trades on the Taiwan Stock
Exchange. A Taiwan - based broker quotes the Taiwan
dollar (TWD) price of the shares of this firm as
150.35-150.75, with a commission of 0.10 percent of
the transaction value. The Taiwan Stock Exchange
charges a tax of 0.30 percent of the value traded from
the seller. A bank is quoting the TWD/EUR exchange
rate as 32.8675-32.8800. How many euros will the
French institutional investor receive on selling the
shares? Please provide detailed explanation, I'll make
sure to upvote!
Transcribed Image Text:A French institutional investor wishes to decrease its exposure to Taiwan. It is interested in selling 20,000 shares of a particular Taiwanese firm that is currently in its portfolio. This firm trades on the Taiwan Stock Exchange. A Taiwan - based broker quotes the Taiwan dollar (TWD) price of the shares of this firm as 150.35-150.75, with a commission of 0.10 percent of the transaction value. The Taiwan Stock Exchange charges a tax of 0.30 percent of the value traded from the seller. A bank is quoting the TWD/EUR exchange rate as 32.8675-32.8800. How many euros will the French institutional investor receive on selling the shares? Please provide detailed explanation, I'll make sure to upvote!
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