Suppose a U.S. investor wishes to invest in a British firm currently selling for £40 per share. The investor has $10,000 to invest, and the current exchange rate is $2 per £. Required: a. How many shares can the investor purchase? Note: Round your answer to the nearest whole number. Number of shares 125 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). Note: Round your percentage answers to 2 decimal places. Negative amounts should be indicated by a minus sign. Price per Share (£) Pound-Denominated Dollar-Denominated Return (%) for Year-End Exchange Rate Return (%) $1.80 per £ $2.00 per £ $2.20 per £ £ 35 % % % % £ 40 % % % % £ 45 % % % %
Suppose a U.S. investor wishes to invest in a British firm currently selling for £40 per share. The investor has $10,000 to invest, and the current exchange rate is $2 per £. Required: a. How many shares can the investor purchase? Note: Round your answer to the nearest whole number. Number of shares 125 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). Note: Round your percentage answers to 2 decimal places. Negative amounts should be indicated by a minus sign. Price per Share (£) Pound-Denominated Dollar-Denominated Return (%) for Year-End Exchange Rate Return (%) $1.80 per £ $2.00 per £ $2.20 per £ £ 35 % % % % £ 40 % % % % £ 45 % % % %
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
Related questions
Question
PLEASE ANSWER CORRECTLY BY GIVING ME THE RIGHT ANSWER
DO NOT GIVE ME THE WRONG ANSWER
ANSWER BULLET POINT B TABLE COMPLETELY
Transcribed Image Text:Suppose a U.S. investor wishes to invest in a British firm currently selling for £40 per share. The investor has $10,000 to invest, and the
current exchange rate is $2 per £.
Required:
a. How many shares can the investor purchase?
Note: Round your answer to the nearest whole number.
Number of shares
125
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).
Note: Round your percentage answers to 2 decimal places. Negative amounts should be indicated by a minus sign.
Price per
Share (£)
Pound-Denominated
Dollar-Denominated Return (%) for Year-End Exchange Rate
Return (%)
$1.80 per £
$2.00 per £
$2.20 per £
£
35
%
%
%
%
£
40
%
%
%
%
£
45
%
%
%
%
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