Question

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Amanda purchased stock in a German firm at a price per share of 35 euros when...

Amanda purchased stock in a German firm at a price per share of 35 euros when the US $/euro exchange rate was $1.40. After six months, Ann sold the stock for 37 euros when the US $/euro exchange rate was $1.45. The stock does not pay a dividend. What is Ann's rate of return on this investment?

9.5%

5.7

-9.5

-5.7

Solutions

Expert Solution

Answer :

Here, we know that,

Rate of return = ( Sale price * Exchange rate ) / ( Purchase price * Exchange rate ) - 1

= ( 37 * 1.45 ) / ( 35 * 1.40 ) - 1

= ( 53.65 / 49 ) - 1

Rate of return = 9.5%

The answer is option (1) i.e., 9.5%

jeff jeffy answered 2 years ago
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