A U.S. investor makes an investment in Britain and earns 14% on the investment while the British pound appreciates against the U.S. dollar by 8%. What is the investor's total return?
A) 22.00%
B) 23.12%
C) 6.00%
D) 4.88%

Question

Quizplus · Accepted Answer

The total return is calculated as the sum of the return on the investment and the return from currency appreciation.

Return on investment = 14%
Return from currency appreciation = 8%

Total return = 14% + 8% + (14% * 8%) = 23.12%

A US Investor Makes an Investment in Britain and Earns 14