Assume that you have invested $100,000 in Japanese equities. When purchased the stock's price and the exchange rate were V100 and V100/$1.00respectively. At selling time, one year after purchase, they were Y110 and V110/51.00. If the investor had sold V10,000,000 forward at the forwardexchange rate of V105/$1.00 the dollar rate of return would be:ⒸA. 28.00%●B.-9.09%OC 4.32%OD 27.27%

The relative worth of two currencies, or the amount of one currency that may be exchanged for one…

Assume that you have invested $100,000 in Japanese equities. When purchased the stock's price and the exchange rate were 100 and $100/$1.00 respectively. At selling time, one year after purchase, they were V110 and V110/51.00. If the investor had sold V10,000,000 forward at the forward exchange rate of V105/$1.00 the dollar rate of return would be: A. 28.00% 8.-9.09% OC 4.32% OD.-27.27 %

Assume that you have invested $100,000 in Japanese equities. When purchased the stock's price and the exchange rate were 100 and $100/$1.00 respectively. At selling time, one year after purchase, they were V110 and V110/51.00. If the investor had sold V10,000,000 forward at the forward exchange rate of V105/$1.00 the dollar rate of return would be: A. 28.00% 8.-9.09% OC 4.32% OD.-27.27 %

International Financial Management

14th Edition

ISBN:9780357130698

Author:Madura

Publisher:Madura

Chapter5: Currency Derivatives

Section: Chapter Questions

Problem 41QA

See similar textbooks

Similar questions

Suppose you start with buying a stock in £ (equivalent to $100) when the exchange rate is £1 = $1.5. One year later, the stock price changes to £75, and you sell it. At the time of the sale, the exchange rate is £1 = $1.6. What is your total percentage return? What percentage of your return is due to the exchange rate? Total return = 12.50%; Exchange rate return = 6.67%. Total return = 20%; Exchange rate return = 7.50%. Total return = 20%; Exchange rate return = 0.0%. Total return = 12.50%; Exchange rate return = 7.50%. Total return = 0.0%; Exchange rate return = 7.50%. Total return = 20%; Exchange rate return = 6.67%.
(a) Calculate the euro-based return an Italian investor would have realized by investing €10,000 into a £50 British stock. One year after investment, the stock pays a £1 dividend, and sells for £55 the exchange rate has changed from €1.25 per pound to €1.30 per pound. (b) Calculate the euro-based return an Italian investor would have realized by investing €10,000 into a £50 British stock using 50 percent margin. One year after investment, the stock pays a £1 dividend, and sells for £54. In the meantime, the exchange rate has changed from €1.25 per pound to €1.30 per pound. The interest on the margin loan is 1 percent per year. The margin loan was denominated in pounds.
Suppose an investor buys a share of British Petroleum at a price of £32 at the start of the year. During the year, the investor receives a dividend of £1.5. At the end of the year, the price of BP is £34. During the year, the exchange rate goes from £1 = $1.78 to £1 = $1.63. What was the investor's dollar return on BP? a) -2.35% b) -6.47% c) 1.59% d) 10.94%
Suppose a U.S. investor wishes to invest in a British firm currently selling for £100 per share. The investor has $24,000 to invest, and the current exchange rate is $2/£. Required:a. How many shares can the investor purchase? (Round your answer to the nearest whole number.) b. Fill in the table below for dollar-denominated rates of return after one year in each of the nine scenarios (three possible share prices denominated in pounds times three possible exchange rates). (Round your percentage answers to 2 decimal places. Negative amounts should be indicated by a minus sign.)
One year ago you bought the common stock of Mizuho at ¥1050 in Tokyo Stock Exchange. The price is ¥1000 today. You received a dividend of ¥120 per share during the period. The exchange rate was ¥100 = $1 when you bought the stock and it is ¥80 = $1 today. Calculate the realized dollar rate of return on the stock if you sell the stock today. Select one: -6.89% O b. 28.11% O C. 33.33% O d. 23.13% a.
es Suppose a U.S. investor wishes to invest in a British firm currently selling for £40 per share. The investor has $20,000 to invest, and the current exchange rate is $2/£. Required: a. How many shares can the investor purchase? (Round your answer to the nearest whole number.) Number of shares b. Fill in the table below for dollar-denominated rates of return after one year in each of the nine scenarios (three possible share prices denominated in pounds times three possible exchange rates). (Round your percentage answers to 2 decimal places. Negative amounts should be indicated by a minus sign.) Price per Share (£) £ CH WH 33 38 43 Pound-Denominated Return (%) % % % Dollar-Denominated Return (%) for Year-End Exchange Rate $1.60/£ $2.00/£ $2.40/£ % % % % % % % %
Required: Suppose you are a euro-based Italian investor, and you are investing €11,200 to buy shares of a British company at £50 per share. The exchange rate is €1.40 per pound. The stock pays a £1 dividend one year later, and you sell your shares for £54. The exchange rate has changed to €1.45 per pound at the time of your sale. What is your pound rate of return on this investment and the change in pound-euro exchange rate? What is your euro rate of return? If you had agreed at the outset to sell £8,000 forward at the rate of €1.35 per pound, what is your euro rate of return on this investment? Note: Enter your answer as a percent rounded to 2 decimal places. Pound rate of return % _____ Change in pound-euro exchange rate % _______ Euro rate of return on €11200 inverstment % ___________ Euro rate of return on €8,000 forward sale % ________
Suppose a U.S. investor wishes to invest in a British firm currently selling for £40 per share. The investor has $12,000 to invest, and the current exchange rate is $2/£. a. How many shares can the investor purchase? (Round your answer to the nearest whole number.) Number of shares b. Fill in the table below for rates of return after one year in each of the nine scenarios (three possible share prices denominated in pounds times three possible exchange rates). (Round your answers to 2 decimal places. Leave no cells blank - be certain to enter "O" wherever required. Negative amounts should be indicated by a minus sign.) Dollar-Denominated Return (%) for Year-End Exchange Rate Price per Share (£) Pound-Denominated Return (%) $1.60/£ $2.00/£ $2.40/£ % % % % % £ 36 % % % % £ 41 % £ 46 % %
Suppose a U.S. investor wishes to invest in a British firm currently selling for £40 per share. The investor has $12,000 to invest, and the current exchange rate is $2/£. a. How many shares can the investor purchase? (Round your answer to the nearest whole number.) Number of shares b. Fill in the table below for dollar-denominated rates of return after one year in each of the nine scenarios (three possible share prices denominated in pounds times three possible exchange rates). (Round your answers to 2 decimal places. Leave no cells blank - be certain to enter "0" wherever required. Negative amounts should be indicated by a minus sign.) Price per Share (E) £ £ £ 150 39 44 49 Pound-Denominated Dollar-Denominated Return (%) for Year-End Exchange Rate Return (%) $1.60/E $2.00€ $2.40/E % % % % % % % % % % % %
A stock price is worth CHF 229 on 01.01.2022 and CHF 152 on 01.01.2023. The exchange rate between CHF and $ is 1.0575 CHF/$ and the exchange rate between CHF and british pounds (GPB) is 0.972 CHF/GPB. a) If the price growth rate was the same in 2021 as in 2022, what was the price, in CHF, on 01.01.2021? (Round your answer to 2 digits after the decimal point if needed)
Suppose a U.S. 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? Number of shares = 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). (Leave no cells blank - be certain to enter "0" wherever required. Negative values should be indicated by a minus sign. Do not round intermediate calculations. Round your answers to 2 decimal places.) Price per Share (£) Pound-Denominated Return (%) Dollar-Denominated Return (%)for Year-End Exchange Rate $1.80/£ $2/£ $2.20/£ £35 % % % % % % £40 % % % % % % £45 % % % % % %
A European call on OPSY stock with a strike price of $22.50 is worth $1.75. Let the present value of the strike price be $22.25. A European put on the stock with identical terms is worth the same. If the price of OPSY stock is $22, the arbitrage profit that you can create today by trading the stock and other related securities is: (Answer in dollars without $)