Amanda purchased stock in a German firm at a price per share of 35 euros when the US $/euro exchange rate was $1.40.After six months, Ann sold the stock for 37 euros when the US $/euro exchange rate was $1.45.The stock does not pay a dividend.What is Ann's rate of return on this investment?

Question

Quizplus · Accepted Answer

Ann's rate of return is calculated by considering both the change in stock price and the change in exchange rate. The initial investment in USD is 35 euros * $1.40 = $49. The selling price in USD is 37 euros * $1.45 = $53.65. The rate of return is (($53.65 - $49) / $49) * 100% = 9.5%.

Amanda Purchased Stock in a German Firm at a Price