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

question 46

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Calculate the euro-based return an Italian investor would have realized by investing €10,000 into a £50 British stock on margin with only 40% down and 60% borrowed.The stock pays a £0.30 quarterly dividend, and after one year the investment sells for £54. The interest on the margin loan is 1% per year. The margin loan is denominated in pounds.
Spot exchange rates at the start and end of the year are shown in the table.


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