A U.S. investor makes an investment in Britain and earns 14% on the investment while the...
A U.S. investor makes an investment in Britain and earns 14% on the investment while the British pound depreciates against the U.S. dollar by 8%. What is the investor's total return?
22.00%
23.12%
6.00%
4.88%
none of the above is correct
Homework Answers
As the value of pound as depreciated against the dollar, you will have lesser dollar for same pound than previously.
Dollar total returns = (1 + 14%) x (1 - 8%) - 1 = 4.88%
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