An American Investor Buys 100 Shares of London Enterprises at a Price

question 72

Essay

An American investor buys 100 shares of London Enterprises at a price of £50 when the exchange rate is $1.60/£. A year later the shares are selling at £52. No dividends have been paid.
a. What is the rate of return to the American investor if the exchange rate is still $1.60/£?
b. What if the exchange rate is $1.70/£?
c. What if the exchange rate is $1.50/£?

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Definitions:

Nutrient Absorption

The process by which substances such as vitamins, minerals, and other nutrients are taken up into the body, usually within the intestines.

Food Storage

The practice of keeping and preserving food substances in a safe and usable condition for future consumption.

Electromagnetic Spectrum

The range of all types of electromagnetic radiation, from gamma rays to radio waves.

Red Wavelengths

The longer wavelengths of light in the visible spectrum, associated with the color red and having a wavelength of approximately 620 to 750 nanometers.