(a) James is US investor, just sold a share of BMW company from German with €5,650. The share was bought for €4950 a year ago. The exchange rate is €0.84 per dollar now and was €0.85 per dollar a year ago. James received €90 as a cash dividend immediately before the share was sold. Compute the rate of return in this investment in terms of U.S dollars. (b) George is an investor from Canada. He owns one bond which located in London Stock Exchange (LSE). The bond has issued with coupon rate of 10 percent and face value at CND1,000. At the end of the year the bond was priced at CND1,100. Because of the bond will mature in one year, the exchange rate goes from $1.2443/CND to $1.3545/CND. Determine the rate of return in dollar terms with total dividend is CND25.

(a) James is US investor, just sold a share of BMW company from German with €5,650. The share was bought for €4950 a year ago. The exchange rate is €0.84 per dollar now and was €0.85 per dollar a year ago. James received €90 as a cash dividend immediately before the share was sold. Compute the rate of return in this investment in terms of U.S dollars. (b) George is an investor from Canada. He owns one bond which located in London Stock Exchange (LSE). The bond has issued with coupon rate of 10 percent and face value at CND1,000. At the end of the year the bond was priced at CND1,100. Because of the bond will mature in one year, the exchange rate goes from $1.2443/CND to $1.3545/CND. Determine the rate of return in dollar terms with total dividend is CND25.

Intermediate Financial Management (MindTap Course List)

13th Edition

ISBN:9781337395083

Author:Eugene F. Brigham, Phillip R. Daves

Publisher:Eugene F. Brigham, Phillip R. Daves

Chapter27: Multinational Financial Management

Section: Chapter Questions

Problem 9P

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