A British investor owns a portfolio of U.S. stocks worth the US $20 million. The current spot rate and one-month forward exchange rates are Pounds 0.66/$. Interest rates are equal in both countries. The investor sells forward $15 million to hedge currency risk because he is concerned about the outcome of the US elections. A week later, the US stock portfolio has gone up to $21,200,000, and the spot and forward exchange rates are now Pounds 0.56/$.

Find out R* or return in-home or domestic currency.

Answer rating: 100% (QA)

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