The Figure Given Below Depicts the Foreign Exchange Market for British

question 72

Multiple Choice

The figure given below depicts the foreign exchange market for British pounds traded for U.S. dollars.Figure 22.2

-Suppose a U.S. firm buys a one-year U.K. bond for 6,000 British pounds when 1 British pound is worth $1.50 on the foreign exchange market. What is the firm's approximate rate of return on the bond if the interest rate on the bond is 15 percent and the exchange rate is 1 British pound worth $1.93 at maturity?

• A)11 percent
• B)15 percent
• C)25 percent
• D)33 percent
• E)48 percent

Grasp the complexities involved in solving wicked problems through social entrepreneurship.

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Grasp the results and impact of social entrepreneurship on society and economy.

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Definitions:

Risk-Free Return

The theoretical return on an investment with zero risk of financial loss, often represented by the return on government securities.

Treynor's Measure

A performance metric for determining how well an investment portfolio has compensated the investor for the risk taken, using beta as the risk measure.

Risk-Free Return

The theoretical return on an investment with zero risk, typically represented by government bonds or bills, serving as a benchmark for assessing investment performance.

Information Ratio

This ratio measures the excess return of a portfolio over the benchmark's return, relative to the volatility of those excess returns, indicating the portfolio manager's ability to generate consistent excess returns.