Instruction 17.1: Use the Information to Answer the Following Question(s)

question 38

Multiple Choice

Instruction 17.1:
Use the information to answer the following question(s) .
In September 2002 a U.S. investor chooses to invest $500,000 in German equity securities at a then current spot rate of $1.30/euro. At the end of one year the spot rate is $1.35/euro.
-Refer to Instruction 17.1.At the end of the year the investor sells his stock that now has an average price per share of euro 57.What is the investor's average rate of return before converting the stock back into dollars?

• A)5.0%
• B)-3.0%
• C)-5.0%
• D)3.0%

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Definitions:

Cash Equivalents

Short-term, highly liquid investments that are readily convertible to known amounts of cash and have original maturities of three months or less.

Financial Statements

Reports that summarize the financial performance, position, and cash flows of a business for a specific period.

Disclosure

The act of providing important information to stakeholders, required by regulations to ensure transparency and fairness in financial reporting and corporate actions.

Bank Reconciliation

The process of matching and comparing figures from the accounting records against those presented on a bank statement to ensure accuracy and consistency in the accounts.