An American investor buys 100 shares of London Enterprises at a price of 50 when the exchange

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An American investor buys 100 shares of London Enterprises at a price of £50 when the exchange rate is USD2 = GBP1. A year later the shares are selling at £52. No dividends have been paid.

a. What is the rate of return to an American investor if the exchange rate is still USD2 = GBP1?

b. What if the exchange rate is USD2.20 = GBP1?

c. What if the exchange rate is USD1.80 = GBP1?

Exchange Rate
The value of one currency for the purpose of conversion to another. Exchange Rate means on any day, for purposes of determining the Dollar Equivalent of any currency other than Dollars, the rate at which such currency may be exchanged into Dollars...
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Fundamentals of Corporate Finance

ISBN: 978-1259722615

9th edition

Authors: Richard Brealey, Stewart Myers, Alan Marcus

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