A US Investor Makes an Investment in Britain and Earns 14

question 16

Multiple Choice

A U.S. investor makes an investment in Britain and earns 14% on the investment while the British pound appreciates against the U.S. dollar by 8%. What is the investor's total return?

• A) 22.00%
• B) 23.12%
• C) 6.00%
• D) 4.88%

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Definitions:

Profit

The financial gain made in a transaction or operation, calculated as the difference between the revenue earned and the costs incurred.

Short Run

A time period in economic analysis during which at least one factor of production is fixed, influencing the firm's decisions on output and pricing.

Profit

The financial gain realized when the revenue generated from a business activity exceeds the expenses, costs, and taxes needed to sustain the activity.

Competitive Industry

An industry where no single firm has a large market share and each firm must compete on price, quality, and innovation to attract customers.