Calculate the dollar-based percentage return an American would have if he bought a British stock at...
Calculate the dollar-based percentage return an American would have if he bought a British stock at ₤50 per share and sold it one year later at ₤60. The spot exchange rate one year ago was $1.50 = ₤1 and the spot rate prevailing at the end of the year was $1.20 = ₤1.
Homework Answers
Stock bought at ₤50 per share
So,
Dollar Price = 1.50(50) = $75
Stock sold at ₤60
So,
Dollar Selling Price = 1.20(60) = $72
Dollar Percentage Return = (72 - 75)/75
Dollar Percentage Return = -4%
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