For an American investor, the expected rate of return on European securities depends on all of the following factors EXCEPT the
A) rate of return on equivalent American securities.
B) current exchange rate between the dollar and the pound.
C) exchange rate anticipated to prevail when the securities mature.
D) interest rate paid on European securities.

Question

Quizplus · Accepted Answer

The expected rate of return on European securities for an American investor is influenced by the current and anticipated future exchange rates, and the interest rate paid on those securities, but not directly by the rate of return on equivalent American securities.

For an American Investor, the Expected Rate of Return on European