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

question 22

Essay

Calculate the euro-based return an Italian investor would have realized by investing €10,000 into a £50 British stock.One year after investment,the stock pays a £1 dividend,and sells for £54 the exchange rate has changed from €1.25 per pound to €1.30 per pound,although he sold £10,000 forward at the forward rate of €1.28 per pound.
Spot exchange rates at the start and end of the year are shown in the table. $$\begin{array} { | l | l | l | l | } \hline & \text { Spot Rate } \mathrm { T } = 0 & \text { Spot Rate } \mathrm { T } = 1 & \text { Forward rate } \\\hline \text { Euro } & \$ 1.60 & \$ 1.60 & \$ 1.625 \\\hline \text { pound } & \$ 2.00 & \$ 2.08 & \$ 2.08 \\\hline\end{array}$$

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Definitions:

Resentment

Persistent feelings of bitterness or ill will towards someone or something perceived as having caused harm or injustice.

Counter-Revenge

Actions or strategies designed to neutralize or respond to acts of revenge, aiming to de-escalate a conflict.

Revenge

A form of retaliation against someone for wrongs perceived by the avenger.

Making Amends

The act of trying to correct wrongs one has committed, often involving apologies and actions to repair harm.