Suppose a U.S. investor wishes to invest in a British firm currently selling for ₤50 per share. The investor has $7,000 to invest and the current exchange rate is $1.40/₤.
-How many shares can the investor purchase?

Question

Quizplus · Accepted Answer

The investor has $7,000, which can be converted to British pounds at the exchange rate of $1.40/₤. This gives ₤5,000 ($7,000 / $1.40). At ₤50 per share, the investor can purchase 100 shares (₤5,000 / ₤50).