You live in London and have invested in shares of Societe Gererale de Belgique at a price of €52.00. By the end of the year you have received dividends of €1.00, share price has risen to €54.50, and the pound has fallen 20% against the euro. Which of the following is closest to your pound sterling return for the year?

Question

Quizplus · Accepted Answer

Step 1: Pound sterling initial investment = €52.00 / 0.8 = £65.00 (due to 20% fall in the pound).

Step 2: Pound sterling dividend received = €1.00 / 0.8 = £1.25 (due to 20% fall in the pound).

Step 3: Pound sterling value of shares at the end of the year = €54.50 / 0.8 = £68.13 (due to 20% fall in the pound).

Step 4: Total pound sterling return for the year = (Pound sterling dividends + Pound sterling value of shares at the end of the year - Pound sterling initial investment) / Pound sterling initial investment x 100%.

= (£1.25 + £68.13 - £65.00) / £65.00 x 100% = 33.51%.

Therefore, the closest answer is E (+33%).

You Live in London and Have Invested in Shares of Societe