An investor in the United States bought a one-year New Zealand security valued at 200,000 New...

 

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An investor in the United States bought a one-year New Zealand security valued at 200,000 New Zealand dollars. The U.S. dollar equivalent was $100,000. The New Zealand security earned 15 percent during the year, but the New Zealand dollar depreciated 5 cents against the U.S. dollar during the time period (\$0.50/NZD to $0.45/NZD). After transferring the funds back to the United States, what was the investor's return on his $100,000? Determine the total ending value of the New Zealand investment in New Zealand dollars and then translate this value to U.S. dollars by multiplying by $0.45. Then compute the return on the $100,000. An investor in the United States bought a one-year New Zealand security valued at 200,000 New Zealand dollars. The U.S. dollar equivalent was $100,000. The New Zealand security earned 15 percent during the year, but the New Zealand dollar depreciated 5 cents against the U.S. dollar during the time period (\$0.50/NZD to $0.45/NZD). After transferring the funds back to the United States, what was the investor's return on his $100,000? Determine the total ending value of the New Zealand investment in New Zealand dollars and then translate this value to U.S. dollars by multiplying by $0.45. Then compute the return on the $100,000.

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The return on investment would be 10 percent 100000 x 15 15000 15000 ... View the full answer