# Question: Suppose a Canadian investor wishes to invest in a British

Suppose a Canadian 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/£.

a. How many shares can the investor purchase?

b. Fill in the table below for rates of return after one year in each of the nine scenarios (three possible prices per share in pounds times three possible exchange rates).

c. When is the dollar- denominated return equal to the pound- denominated return?

a. How many shares can the investor purchase?

b. Fill in the table below for rates of return after one year in each of the nine scenarios (three possible prices per share in pounds times three possible exchange rates).

c. When is the dollar- denominated return equal to the pound- denominated return?

## Relevant Questions

Consider the following data for the three stocks that make up the market: a. What is the single-period return on the price-weighted index constructed from the three stocks? b. What is the single-period return on the ...A T-bill has a bank discount yield of 6.81 percent based on the ask price, and 6.90 percent based on the bid price. The maturity of the bill (already accounting for skip-day settlement) is 61 days. Find the bid and ask ...On May 1, you sold short one “round lot” (i. e., 100 shares) of Zenith stock at $ 14 per share. On July 1, a dividend of $ 2 per share was paid. On August 1, you covered the short sale by buying the stock at a price of $ ...Consider the following limit- order book of a market- maker. The last trade in the stock took place at a price of $ 50. a. If a market- buy order for 100 shares comes in, at what price will it be filled? b. At what price ...Suppose two all- equity- financed firms, ABC and XYZ, both have $ 100 million of equity out-standing. Each firm now issues $ 10 million of new stock and uses the proceeds to purchase the other’s shares. a. What happens to ...Post your question