Consider an Australian investor who borrows money in pounds from a UK bank at an interest rate of 3.9 per cent, in order to buy Australian shares. After one year, the shares have increased in price by 5 per cent, while the Australian dollar has appreciated against the pound by 4 per cent.

If the investor then sells the shares and repays the loan and interest, what is the approximate net gain or loss expressed as a percentage of the original amount borrowed?

Answer rating: 100% (QA)

To calculate the net gain or loss in this scenario we need to take into account the following Intere... View the full answer