2. You are a U.S. investor and wish to buy 10,000 shares of Club Méditerranée ("Club Med"). You can buy them on the Paris Bourse or on SEAQ International in London. You ask the brokers to quote you net prices (no commissions paid). There are no taxes on foreign shares listed in London. Here are the quotes: London (in £) Paris (in €) $/£ (dollars per pound) €/S (euros per dollar) What is your total dollar cost if you buy the Club Med shares at the cheaper place? 56-574 782-78% 1.5000 1.5040 0.91100 0.91200

2. You are a U.S. investor and wish to buy 10,000 shares of Club Méditerranée ("Club Med"). You can buy them on the Paris Bourse or on SEAQ International in London. You ask the brokers to quote you net prices (no commissions paid). There are no taxes on foreign shares listed in London. Here are the quotes: London (in £) Paris (in €) $/£ (dollars per pound) €/S (euros per dollar) What is your total dollar cost if you buy the Club Med shares at the cheaper place? 56-574 782-78% 1.5000 1.5040 0.91100 0.91200

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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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?
The exchange rates in New York for $1 are Can$1.0941 or 0.7257 pounds. In Toronto, Can$1 will buy 0.6722 pounds. How much profit can you earn on $8,500 using triangle arbitrage?" $107.90 $114.25 $120.26 $105.46 $142.81
Required: 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 $1.06 per euro. You sold the stock for $162 per share and converted the dollar proceeds into euro at the exchange rate of $0.97 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? Note: Do not round intermediate calculations. Round 'profit' to the nearest whole number. Enter your answer as a percent rounded to 2 decimal places. Profit Rate of return % Rate of return due to exchange rate movement %
A US investor wishes to invest in a British firm currently selling for GBP 40 a share. He has $10 000 to invest, and the current exchange is $2/GBP. Required: (a) How many shares can the investor purchase? (b) Given share prices of GBP 35, 40 and 45, and exchange rates of $/GBP 1.80, 2 and 2.20 respectively, calculate the $ and GBP rates of return for each of the nine scenarios (three possible prices per share in GBP times three possible exchange rates?
A US investor wishes to invest in a British firm currently selling for GBP 40 a share. He has $10 000 to invest, and the current exchange is $2/GBP. Required: (a) How many shares can the investor purchase? (b) Given share prices of GBP 35, 40 and 45, and exchange rates of $/GBP 1.80, 2 and 2.20 respectively, calculate the $ and GBP rates of return for each of the nine scenarios (three possible prices per share in GBP times three possible exchange rates. (c) If each of the nine outcomes is equally likely, find the standard deviation of both the GBP and $ denominated rates of return.
Required: 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 $1.09 per euro. You sold the stock for $153 per share and converted the dollar proceeds into euro at the exchange rate of $1.00 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? Note: Do not round intermediate calculations. Enter your answer as a percent rounded to 1 decimal places.
An investor in England purchased a 91 day US Treasury bill for 987.65. (Treasury bills are discount bonds that pay $1000 at maturity.) When the T-bill was purchased, the exchange rate was $1.75 per pound. At maturity, the exchange rate was $1.83 per pound. What was the investor’s holding period return in pounds? Note:- Do not provide handwritten solution. Maintain accuracy and quality in your answer. Take care of plagiarism. Answer completely. You will get up vote for sure.
In each of the following cases, calculate the price of one share of the foreign stock measured in United States dollars (US$). a. A Belgian stock priced at 102.6 euros (€) when the exchange rate is 1.0823US$/€ (i.e., each euro is worth $1.0823). b. A Swiss stock priced at 93.1 Swiss francs (Sf) when the exchange rate is 1.0488US$/Sf. c. A Japanese stock priced at 1,363 yen (¥) when the exchange rate is 105.8362\/US$. a. The Belgian stock priced in U.S. dollars is $ (Round to the nearest cent.) ...
Assume the exchange rates in New York for $1 are C$1.1382 and £.6387 while in Toronto, C$1 will buy £.5612. How much profit can you earn on $10,000 using triangle arbitrage?
A US investor wishes to invest in a British firm currently selling for GBP 40 a share. He has $10 000 to invest, and the current exchange is $2/GBP. (a) How many shares can the investor purchase? (b) Given share prices of GBP 35, 40 and 45, and exchange rates of $/GBP 1.80, 2 and 2.20 respectively, calculate the $ and GBP rates of return for each of the nine scenarios (three possible prices per share in GBP times three possible exchange rates. (c) If each of the nine outcomes is equally likely, find the standard deviation of both the GBP and $ denominated rates of return.
You are the financial manager for Belltower Associates, which is headquartered in Australia. You have received the below spot and interest rates quotes from your bank: Bid Ask NZD 0.8298/AUD NZD 0.8340/AUD 4.50% 5.00% 0.90% 1.30% Spot exchange rate Interest rate for AUD Interest rate for NZD Suppose that Belltower Associates has a receivable in NZD in one year's time and they wish to engage in a hedge to lock in their domestic (i.e. Australian dollar) currency equivalent of its value. Belltower Associates intends to achieve this by using their bank's spot rates and money market interest rates in order to create a synthetic forward contract. What is the effective forward exchange rate that Belltower Associates is able to achieve for hedging the AUD value of their NZD receivable? O a. NZD 0.8012/AUD O b. NZD 0.8635/AUD O c. O d. O e. NZD 0.8298/AUD NZD 0.8594/AUD NZD 0.7974/AUD NZD 0.8085/AUD
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?

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