ppose you start with buying a stock in £ (equivalent to $100) when the e te is £1 = $1.5. One year later, the stock price changes to £75, and you s e time of the sale, the exchange rate is £1 = $1.6. What is your total pero turn? What percentage of your return is due to the exchange rate? Total return = 12.50%; Exchange rate return = 6.67%. Total return = 20%; Exchange rate return = 7.50%. Total return = 20%; Exchange rate return = 0.0%. Total return = 12.50%; Exchange rate return = 7.50%. Total roturn-00% Exchange rato return - 7 50%

ppose you start with buying a stock in £ (equivalent to $100) when the e te is £1 = $1.5. One year later, the stock price changes to £75, and you s e time of the sale, the exchange rate is £1 = $1.6. What is your total pero turn? What percentage of your return is due to the exchange rate? Total return = 12.50%; Exchange rate return = 6.67%. Total return = 20%; Exchange rate return = 7.50%. Total return = 20%; Exchange rate return = 0.0%. Total return = 12.50%; Exchange rate return = 7.50%. Total roturn-00% Exchange rato return - 7 50%

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter22: International Financial Management

Section: Chapter Questions

Problem 2P

See similar textbooks

Similar questions

Suppose you are a euro-based Italian investor, and you are investing €10,400 to buy shares of a British company at £50 per share. The exchange rate is €1.30 per pound. The stock pays a £1 dividend one year later, and you sell your shares for £56. The exchange rate has changed to €1.35 per pound at the time of your sale. What is your pound rate of return on this investment and the change in pound-euro exchange rate? What is your euro rate of return? If you had agreed at the outset to sell £8,000 forward at the rate of €1.33 per pound, what is your euro rate of return on this investment? Note: Enter your answer as a percent rounded to 2 decimal places.
Required: Suppose you are a euro-based Italian investor, and you are investing €11,200 to buy shares of a British company at £50 per share. The exchange rate is €1.40 per pound. The stock pays a £1 dividend one year later, and you sell your shares for £54. The exchange rate has changed to €1.45 per pound at the time of your sale. What is your pound rate of return on this investment and the change in pound-euro exchange rate? What is your euro rate of return? If you had agreed at the outset to sell £8,000 forward at the rate of €1.35 per pound, what is your euro rate of return on this investment? Note: Enter your answer as a percent rounded to 2 decimal places. Pound rate of return % _____ Change in pound-euro exchange rate % _______ Euro rate of return on €11200 inverstment % ___________ Euro rate of return on €8,000 forward sale % ________
Suppose a U.S. investor wishes to invest in a British firm currently selling for 50 pounds per share by buying 200 shares of the British firm. The current exchange rate is $1.31 per pound. After one year, the exchange rate is $1.60 per pound and the share price is 59 pounds per share. What is the dollar-denominated return in percentage?
Suppose a U.S. investor wishes to invest in a British firm currently selling for £100 per share. The investor has $24,000 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.) 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.)
Suppose you are a euro-based investor who just sold Microsoft shares that you had bought six months ago. You had invested 10,000 euros to buy Microsoft shares for $120 per share; the exchange rate was $1.13 per euro. You sold the stock for $141 per share and converted the dollar proceeds into euro at the exchange rate of $1.04 per euro. First, determine the profit from this investment in euro terms. Second, compute the rate of return on your investment
Suppose you are a euro-based investor who just sold Microsoft shares that you had bought six months ago. You had invested 10,000 euros to buy Microsoft shares for $120 per share; the exchange rate was $0.97 per euro. You sold the stock for $189 per share and converted the dollar proceeds into euro at the exchange rate of $0.88 per euro. First, determine the profit from this investment in euro terms. Second, compute the rate of return on your investment in euro terms. How much of the return is due to the exchange rate movement?
Suppose you are a euro-based investor who just sold Microsoft shares that you had bought six months ago. You had invested 10,000 euros to buy Microsoft shares for $120 per share; the exchange rate was $1.13 per euro. You sold the stock for $141 per share and converted the dollar proceeds into euro at the exchange rate of $1.04 per euro. First, determine the profit from this investment in euro terms. Second, compute the rate of return on your investment in euro terms. How much of the return is due to the exchange rate movement? (Do not round intermediate calculations. Enter your answer as a percent rounded to 1 decimal places.)
Suppose that a French firm would like to have its stock available through an American Depository Receipt (ADR). If the firm’s stock is currently selling for €75 and that the exchange rate between the € and the $ is €1.0=$1.0592. What price should we expect for the ADR in US dollars? Suppose that over the next year the dollar reaches parity with the Euro, i.e., $1.00=€1.00 and that the price of the French firm’s stock rises to €100. What would expect the price of the ADR to be?
Suppose you are a euro-based investor who just sold Amazon.com Inc. shares that you hadbought six months ago. You had invested 10,000 euros to buy Amazon shares for $120 pershare; the exchange rate was $1.15 per euro. You sold the stock for $135 per share and convertedthe dollar proceeds into euro at the exchange rate of $1.06 per euro. a) Determine the profit from this investment in euro terms.b) Compute the rate of return on your investment in euro terms.c) How much of the return is due to the exchange rate movement?
An investor starts with 1 million and converts them to £694,500, which is then invested for one year. In a year the investor has £736,170 which she then converts back to euros at an exchange rate of 0.68 pounds per euro. What way the annual euro rate of return earned?
Suppose a U.S. investor wishes to invest in a British firm currently selling for £24 per share. The investor has $48,000 to invest, and the current exchange rate is $2/£.Suppose now the investor also sells forward £24,000 at a forward exchange rate of $1.90/£. Calculate the dollar-denominated returns for each scenario.
Suppose an investor buys a share of British Petroleum at a price of £32 at the start of the year. During the year, the investor receives a dividend of £1.5. At the end of the year, the price of BP is £34. During the year, the exchange rate goes from £1 = $1.78 to £1 = $1.63. What was the investor's dollar return on BP? a) -2.35% b) -6.47% c) 1.59% d) 10.94%