In: Finance
Question 1 (1 point)
Samsung’s stock price goes up 30% but the Korean won falls 20% against the Japanese yen. From the perspective of a Japanese investor, what is the yen return on an investment in Korea’s Samsung? [Hint: Assume that Ptd = Ptf Std/f, where, Ptd = domestic price; Ptf = foreign price and Std/f = spot price; return from asset price: (1+rd) = (Ptd/Pt-1d) and return from FX spot price: (1+sd/f) = (Std/f/St-1d/f)].
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Question 2 (1 point)
Which of the following statements is not correct?
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1.
=(1+30%)*(1-20%)-1
=1.3*0.8-1
=4.0000%
Profit of 4%
2.
Hedge funds follow very strict investment strategies (no
flexibility in investment strategies)