In: Finance
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% |
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5.7 |
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-9.5 |
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-5.7 |
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%