S IDF PROBLEM 4-ADJUSTING RETURNS FOR EXCHANGE RATES An investor in the United States bought a one-year Brazilian security valued at 195,000 Brazilian reals The US dollar equivalent was $100,000....

Question

Question

Answer 1

Answer #1

Value of the security in Brazilian reals = (1+16%)*195000=226200

New exchange rate is $0.46 for every 1 Brazilian real.

So value in USD is 0.46*226200=$104052

Return in USD = (104052-100000)/100000=4.052%

Answer 2

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