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The New-York-based mutual fund Apex has invested in the Paris-traded Etablissements Michelin at the cost of € 74 per share.

The New-York-based mutual fund Apex has invested in the Paris-traded Etablissements Michelin at the cost of € 74 per share. One year later Apex liquidates its investment selling Michelin stock at €81, having earned a dividend of € 2.40 per share. Over the investment period the euro declined by 2.7%. What was Apex total return from investing in Michelin stock

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Expert Solution

Buying Price = € 74 per share

 

Selling Price= €81 Per Share

 

Dividend  = € 2.40 per share

 

Total Return = (Selling Price +Dividend  -  Buying Price) 

Total Return = (81 +2.40 - 74) 

 

Total Return = € 9.40

 

If the euro is declined in relation to dollar, so the investment return will appreciate for the investors because investor originally belongs to the USA and had investment in Paris. So the investment will appreciate by 2.7% for investor.

 

Total Return = 9.40 x 102.7 / 100

 

Total Actual Return = € 9.65.

Total Actual Return = € 9.65.

Nabeel answered 2 years ago
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