Suppose a U.S. investor wishes to invest in a British firm currently selling for £40 per share. The investor has $12,000 to invest, and the current exchange rate is $2/£. Suppose now the investor also sells forward £6,000 at a forward exchange rate of $1.90/£. Required: a. Calculate the dollar-denominated returns for each scenario. (Round your percentage answers to 2 decimal places. Negative amounts should be indicated by a minus sign.) Price per Share (£) £ ل البال £ 36 41 £ 46 Exchange Rate Rate of Return (%) at Given Exchange Rate $2.00/£ $1.80/£ % % % % % % $2.20/£ % % %

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
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Suppose a U.S. investor wishes to invest in a British firm currently selling for £40 per share. The
investor has $12,000 to invest, and the current exchange rate is $2. Suppose now the investor
also sells forward £6,000 at a forward exchange rate of $
1.90
£
Required: a. Calculate the dollar
- denominated returns for each scenario. (Round your percentage answers to 2 decimal places.
Negative amounts should be indicated by a minus sign.)
Suppose a U.S. investor wishes to invest in a British firm currently selling for £40 per share. The investor has $12,000 to
invest, and the current exchange rate is $2/£.
Suppose now the investor also sells forward £6,000 at a forward exchange rate of $1.90/£.
Required:
a. Calculate the dollar-denominated returns for each scenario. (Round you percentage answers to 2 decimal places.
Negative amounts should be indicated by a minus sign.)
Price
per
Share
(£)
£ 36
£ 41
£ 46
www
Exchange
Rate
Rate of Return (%) at Given Exchange
Rate
$2.00/£
$1.80/£
%
%
%
%
%
%
$2.20/£
%
%
%
Transcribed Image Text:Suppose a U.S. investor wishes to invest in a British firm currently selling for £40 per share. The investor has $12,000 to invest, and the current exchange rate is $2. Suppose now the investor also sells forward £6,000 at a forward exchange rate of $ 1.90 £ Required: a. Calculate the dollar - denominated returns for each scenario. (Round your percentage answers to 2 decimal places. Negative amounts should be indicated by a minus sign.) Suppose a U.S. investor wishes to invest in a British firm currently selling for £40 per share. The investor has $12,000 to invest, and the current exchange rate is $2/£. Suppose now the investor also sells forward £6,000 at a forward exchange rate of $1.90/£. Required: a. Calculate the dollar-denominated returns for each scenario. (Round you percentage answers to 2 decimal places. Negative amounts should be indicated by a minus sign.) Price per Share (£) £ 36 £ 41 £ 46 www Exchange Rate Rate of Return (%) at Given Exchange Rate $2.00/£ $1.80/£ % % % % % % $2.20/£ % % %
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