Problem set 7 - BNFN 416 Investment Management Problem set...

Info iconThis preview shows pages 1–3. Sign up to view the full content.

View Full Document Right Arrow Icon
BNFN 416 Investment Management Problem set 7 (Reference chapter 18) Q1) Suppose a U.S investor wishes to invest in a British firm currently selling for £40 per share. The investor has $ 10000 to invest, and the current exchange rate is $2/£. a) How many shares can the investor purchase? b) Calculate the pound-dominated returns in the table below. Price per Share (£) Pound- Denominated Return (%) £35 £40 £45 Q2) a) Based on the information given in question 1, calculate the dollar-dominated returns in the table below. b) When is the dollar-dominated return equal to the pound-dominated return? Price per Share (£) Dollar-Denominated Return (%) for Year-End Exchange Rate $1.80/£ $2.00/£ $2.20/£ £35 £40 £45 Q3) Based on the information given in question 1, and also suppose the investor sells forward £ 5000 at a forward exchange rate $ 2.10/£. 1
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
a) Calculate Dollar Value of Stock at Given Exchange Rate in the table below. Dollar Value of stock (%) At given Exchange Rate $1.80/£ $2.00/£ $2.20/£ £35 £40 £45 b) Calculate the profits on forward exchange rate
Background image of page 2
Image of page 3
This is the end of the preview. Sign up to access the rest of the document.

This note was uploaded on 10/28/2009 for the course MBA MBA608 taught by Professor Martin during the Spring '09 term at Beirut Arab University.

Page1 / 4

Problem set 7 - BNFN 416 Investment Management Problem set...

This preview shows document pages 1 - 3. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online