Suppose a U.S. investor wishes to invest in a British firm currently selling for £40 per share. The investor has $20,000 to invest, and the current exchange rate is $2/£. Required: a. How many shares can the investor purchase? (Round your answer to the nearest whole number.) Number of shares b. Fill in the table below for dollar-denominated rates of return after one year in each of the nine scenarios (three possible share prices. denominated in pounds times three possible exchange rates). (Round your percentage answers to 2 decimal places. Negative amounts should be indicated by a minus sign.) I 12 12 Price per Share (£) £ £ £ 33 38 43 Pound-Denominated Return (%) % % % Dollar-Denominated $1.60/£ % % % Return (%) for Year-End Exchange Rate $2.00 $2.40/£ % % % % % %
Suppose a U.S. investor wishes to invest in a British firm currently selling for £40 per share. The investor has $20,000 to invest, and the current exchange rate is $2/£. Required: a. How many shares can the investor purchase? (Round your answer to the nearest whole number.) Number of shares b. Fill in the table below for dollar-denominated rates of return after one year in each of the nine scenarios (three possible share prices. denominated in pounds times three possible exchange rates). (Round your percentage answers to 2 decimal places. Negative amounts should be indicated by a minus sign.) I 12 12 Price per Share (£) £ £ £ 33 38 43 Pound-Denominated Return (%) % % % Dollar-Denominated $1.60/£ % % % Return (%) for Year-End Exchange Rate $2.00 $2.40/£ % % % % % %
Fundamentals of Financial Management, Concise Edition (MindTap Course List)
9th Edition
ISBN:9781305635937
Author:Eugene F. Brigham, Joel F. Houston
Publisher:Eugene F. Brigham, Joel F. Houston
Chapter17: Multinational Financial Management
Section: Chapter Questions
Problem 4DQ
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