John Hill is a Sydney-based investor. He has been closely following his investment in 1,000 shares of Obrekete, an Italian firm that went public in June 2018. When he purchased his 1,000 shares at €80 per share, the euro was trading at AUD$2.5657 / €. Currently, the share is trading at €86 per share and the exchange rate is AUD$2.5563/ €. a. If John sells his shares today, what percentage change in the share price would he receive? b. What is the percentage change in the value of the euro versus the Australian dollar over this same period? c. What is the total return that John would earn on his shares if he sold them at €86 per share? d. If John waits to sell his shares when the price rises to €88 peł share, what will be his returns? e. If the current spot exchange rate changes to AUD$2.4863 / €, what would be the total return on the Obrekete investment in Australian dollars if the price remains at €86 per share?

John Hill is a Sydney-based investor. He has been closely following his investment in 1,000 shares of Obrekete, an Italian firm that went public in June 2018. When he purchased his 1,000 shares at €80 per share, the euro was trading at AUD$2.5657 / €. Currently, the share is trading at €86 per share and the exchange rate is AUD$2.5563/ €. a. If John sells his shares today, what percentage change in the share price would he receive? b. What is the percentage change in the value of the euro versus the Australian dollar over this same period? c. What is the total return that John would earn on his shares if he sold them at €86 per share? d. If John waits to sell his shares when the price rises to €88 peł share, what will be his returns? e. If the current spot exchange rate changes to AUD$2.4863 / €, what would be the total return on the Obrekete investment in Australian dollars if the price remains at €86 per share?

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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John Hill is a Sydney-based investor. He has been closely following his investment in 1,000 shares of Obrekete, an Italian firm that went public in June 2018. When he purchased his 1,000 shares at €80 per share, the euro was trading at AUD$2.5657 / €. Currently, the share is trading at €86 per share and the exchange rate is AUD$2.5563/ €. a. If John sells his shares today, what percentage change in the share price would he receive? b. What is the percentage change in the value of the euro versus the Australian dollar over this same period? c. What is the total return that John would earn on his shares if he sold them at €86 per share? d. If John waits to sell his shares when the price rises to €88 per share, what will be his returns? e. If the current spot exchange rate changes to AUD$2.4863 / €, what would be the total return on the Obrekete investment in Australian dollars if the price remains at €86 per share?
C. Spencer Grant is a New York-based investor. He has been closely following hisinvestment in 100 shares of Vaniteux, a French firm that went public in Februaryof 2010. When he purchased his 100 shares at €17.25 per share, the euro wastrading at $1.360/€. Currently, the share is trading at €28.33 per share, and thedollar has fallen to $1.4170/€.a. If Spencer sells his shares today, what percentage change in the share pricewould he receive?b. What is the percentage change in the value of euro versus the dollar overthis same period?c. What would be the total return Spencer would earn on his shares if he soldthem at these rates?
In December 2017, an American investor buys 1,000 shares in a Mexican company at a price of 500 pesos each. The share does not pay any dividend. A year later she sells the shares for 550 pesos each. Assume the exchange rate when she buys the stock is 13.6733. Suppose that the exchange rate at the time of sale is 13.9768 pesos = $1, answer the following requirements. a. How many dollars does she invest? (Do not round intermediate calculations. Round your answer to 2 decimal places.) b-1. What is her total return in pesos? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.) b-2. What is her total return in dollars? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.)
Suppose you are a euro-based investor who just sold Amazon.com Inc. shares that you hadbought six months ago. You had invested 10,000 euros to buy Amazon shares for $120 pershare; the exchange rate was $1.15 per euro. You sold the stock for $135 per share and convertedthe dollar proceeds into euro at the exchange rate of $1.06 per euro. a) Determine the profit from this investment in euro terms.b) Compute the rate of return on your investment in euro terms.c) How much of the return is due to the exchange rate movement?
14. Ahmad Khaskhali is a Salalah-based investor. He actively invests in different companies around the world, and his recent investments are in Belgium. He recently invested in a company named Matrix in Belgium and bought 200 shares of that firm. Each share of the company costs him €9.75, and at that time, the Euro was trading at OMR0.568/€. Currently, the share is trading at €13.33 per share, and the Euro has fallen to OMR0.5503 /€. i. If Ahmad sells his shares today, what percentage change in the share price would he receive? ii. How much is the percentage change in the price of the Euro? iii. What would be the total return Ahmad would earn on his shares if he sold them at these rates?
Suppose you are a euro-based investor who just sold Microsoft shares that you had bought six months ago. You had invested 10,000 euros to buy Microsoft shares for $120 per share; the exchange rate was $1.13 per euro. You sold the stock for $141 per share and converted the dollar proceeds into euro at the exchange rate of $1.04 per euro. First, determine the profit from this investment in euro terms. Second, compute the rate of return on your investment in euro terms. How much of the return is due to the exchange rate movement? (Do not round intermediate calculations. Enter your answer as a percent rounded to 1 decimal places.)
Suppose you are a euro-based investor who just sold Microsoft shares that you had bought six months ago. You had invested 10,000 euros to buy Microsoft shares for $120 per share; the exchange rate was $0.97 per euro. You sold the stock for $189 per share and converted the dollar proceeds into euro at the exchange rate of $0.88 per euro. First, determine the profit from this investment in euro terms. Second, compute the rate of return on your investment in euro terms. How much of the return is due to the exchange rate movement?
Suppose you are a euro-based investor who just sold Microsoft shares that you had bought six months ago. You had invested 10,000 euros to buy Microsoft shares for $120 per share; the exchange rate was $1.13 per euro. You sold the stock for $141 per share and converted the dollar proceeds into euro at the exchange rate of $1.04 per euro. First, determine the profit from this investment in euro terms. Second, compute the rate of return on your investment
Required: Suppose you are a euro - based investor who just sold Microsoft shares that you had bought six months ago. You had invested 10,000 euros to buy Microsoft shares for $120 per share; the exchange rate was $1.09 per euro. You sold the stock for $153 per share and converted the dollar proceeds into euro at the exchange rate of $1.00 per euro. First, determine the profit from this investment in euro terms. Second, compute the rate of return on your investment in euro terms. How much of the return is due to the exchange rate movement? Note: Do not round intermediate calculations. Enter your answer as a percent rounded to 1 decimal places.
Mr. James K. Silber, an avid international investor, just sold a share of Néstle, a Swiss firm, for SF6,050. The share was bought for SF4,760 a year ago. The exchange rate is SF2.40 per U.S. dollar now and was SF2.10 per dollar a year ago. Mr. Silber received SF152 as a cash dividend immediately before the share was sold. Suppose that Mr. Silber sold SF4,760, his principal investment amount, forward at the forward exchange rate of SF2.42 per dollar. How would this affect the dollar rate of return on this Swiss stock investment? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.) Rate of return %
Required: Suppose you are a euro-based investor who just sold Microsoft shares that you had bought six months ago. You had invested 10,000 euros to buy Microsoft shares for $120 per share; the exchange rate was $1.06 per euro. You sold the stock for $162 per share and converted the dollar proceeds into euro at the exchange rate of $0.97 per euro. First, determine the profit from this investment in euro terms. Second, compute the rate of return on your investment in euro terms. How much of the return is due to the exchange rate movement? Note: Do not round intermediate calculations. Round 'profit' to the nearest whole number. Enter your answer as a percent rounded to 2 decimal places. Profit Rate of return % Rate of return due to exchange rate movement %
Mr. James K. Silber, an avid international investor, just sold a share of Nestlé, a Swiss firm, for SF4,890. The share was bought for SF2,700 a year ago. The exchange rate is SF2.00 per U.S. dollar now and was SF2.16 per dollar a year ago. Mr. Silber received SF310.00 as a cash dividend immediately before the share was sold. Compute the rate of return on this investment in terms of U.S. dollars. (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.)

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