Suppose a U.S. investor wishes to invest in a British firm currently selling for £34 per share. The investor has $6,800 to invest, and the current exchange rate is $2 per £. Suppose now the investor also sells forward £3, 400 at a forward exchange rate of $1.90 per £. Calculate the dollar - denominated returns for each scenario. Note: Round your answers to 2 decimal places. Negative values should be indicated by a minus sign.

Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
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Suppose a U.S. investor wishes to
invest in a British firm currently
selling for £34 per share. The
investor has $6,800 to invest, and
the current exchange rate is $2 per
£. Suppose now the investor also
sells forward £3, 400 at a forward
exchange rate of $1.90 per £.
Calculate the dollar - denominated
returns for each scenario. Note:
Round your answers to 2 decimal
places. Negative values should be
indicated by a minus sign.
Transcribed Image Text:Suppose a U.S. investor wishes to invest in a British firm currently selling for £34 per share. The investor has $6,800 to invest, and the current exchange rate is $2 per £. Suppose now the investor also sells forward £3, 400 at a forward exchange rate of $1.90 per £. Calculate the dollar - denominated returns for each scenario. Note: Round your answers to 2 decimal places. Negative values should be indicated by a minus sign.
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