Calculate the Euro-Based Return an Italian Investor Would Have Realized

question 63

Essay

Calculate the euro-based return an Italian investor would have realized by investing €10,000 into a £50 British stock using 50% margin.One year after investment,the stock pays a £1 dividend,and sells for £54.The interest on the margin loan is 1% per year.The margin loan was denominated in pounds.
Spot exchange rates at the start and end of the year are shown in the table. $$\begin{array} { | l | l | l | } \hline & \mathrm { T } = 0 & \mathrm {~T} = 1 \\\hline \text { euro } & \$ 1.60 & \$ 1.60 \\\hline \text { pound } & \$ 2.00 & \$ 2.08 \\\hline\end{array}$$

---

Definitions:

Move Legs

The action of locomotion involving the lower extremities, primarily controlled by the muscular and skeletal systems.

Startle Reflex

An involuntary reaction to sudden stimuli, characterized by rapid movements and heightened physiological activity.

Superior Colliculi

Structures located in the midbrain that are involved in processing visual information and controlling eye movements.