You are a Canadian investor who purchased British securities for 4,000 pounds one year ago when the British pound cost $1.50.No dividends were paid on the British securities in the past year.Your total return based on Canadian dollars was __________ if the value of the securities is now 4,400 pounds and the pound is worth $1.62.

Question

Quizplus · Accepted Answer

First, we need to convert the initial investment of 4,000 pounds to Canadian dollars using the exchange rate of $1.50/£1:
4,000 pounds x $1.50/£1 = $6,000

Next, we need to calculate the current value of the British securities in Canadian dollars using the exchange rate of $1.62/£1:
4,400 pounds x $1.62/£1 = $7,128

The total return in Canadian dollars is then:
($7,128 - $6,000)/$6,000 x 100% = 18.8%

Therefore, the best choice is B.

You Are a Canadian Investor Who Purchased British Securities for 4,000