Note on Exchange Purchase for portfolio

Note on Exchange Purchase for portfolio - CN will now buy...

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Note on Exchange Purchase for portfolio. This note corrects the portfolio error I made in class today 3-1-2011. The key is to put $100,000 US in as a negative # as you are selling $US to buy Canadian $’s. Data on 3-1-2011 the US/CN exchange rate is currently $ US 1 = $ CN .9748 (meaning $ CN 1= $ US 1.0258), you can purchase $ CN with US $’s if you believe the $CN will rise in value relative to the $US. I assume for teaching purposes that $ CN /$ US on March 15 will be 1/1.05 = .9524. Thus in your portfolio: take $ US 100,000 and buy $ CN 97,480. Then, if the $ CN appreciates in value each $
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Unformatted text preview: CN will now buy more than $ US 1.0258, say $ US 1.05. So in your portfolio you enter the following in the respective columns: Currency Open Date Open EX Cash Out/In Current EX/ EX at Close Close Date Current Total Profit (Loss) %ROI $ Cn 3/1/2011 $CN / $ US ($100,000) $CN/ $US $ Cn 3/15/2011 0.9748 ($100,000.00) 0.9524 3/15/2011 $102,354.10 $2,354.10 2.35% Currency Open Date Open EX Cash Out/In Current EX/ EX at Close Close Date Current Total Profit (Loss) $ Cn 3/1/2011 0.9748 ($100,000.00) 0.9524 3/15/2011$102,354.10 $2,354.10...
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