Ian McKenzie, an avid international investor, just sold a share of Nestle, a Swiss firm, for SFR 5,000. The share was bought for SFR 4,000 a year ago. The exchange rate is now SFR 1.50 / USD and was SFR 1.00 / USD a year ago. Mr. McKenzie received SFR 750 as a cash dividend immediately before the share was sold. Suppose when he made the investment, Mr. McKenzi sold SFR 5,000 forward at the forward exchange rate of SFR 1.25 / USD. What is the amount of profit in USD on this investment?

Answer rating: 100% (QA)

Initial investment in SFR 4000 Prevailing exchange rate SFR 1USD So initial Dollar investment 4... View the full answer