Suppose you are a euro-based Italian Investor, and you are Investing 11,200 to buy shares of...

 

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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. Answer is complete but not entirely correct. 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 96 %6 96 96 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. Answer is complete but not entirely correct. 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 96 %6 96 96

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Pound rate of return To calculate the pound rate of return we first need to calculate the capital ga... View the full answer