Instruction 13.1: Use the Information to Answer the Following Question(s)

question 65

Multiple Choice

Instruction 13.1:
Use the information to answer the following question(s) .
In September 2009 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 13.1. At the end of the year the investor sells his stock that now has an average price per share of €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:

IFRS

International Financial Reporting Standards, which are a set of accounting standards developed by the International Accounting Standards Board for global use.

Comprehensive Income

The total change in equity for a reporting period other than transactions from owners, encompassing all gains and losses that are not recognized in the profit or loss.

Retained Earnings Restrictions

Limitations or constraints placed on the amount of retained earnings that can be used for distribution to shareholders, often due to legal, contractual, or company policy reasons.

Treasury Stock

Shares of a company's own stock that it has reacquired from shareholders, not considered a part of the float and not having voting power or dividend rights.