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

question 37

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 after converting the stock back into dollars?

• A)-1.35%
• B)5.0%
• C)-5.0%
• D)-7.24%

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Definitions:

Produced Units

The quantity of items manufactured during a specific period.

Direct Manufacturing Cost

Direct manufacturing cost encompasses all expenditures directly tied to the production of goods, including materials and labor but excluding overhead costs.

Produced Units

The quantity of units of a product made during a specific period.

Incremental Manufacturing Cost

The additional cost incurred to produce one more unit of a product.