Emerald Energy is an oil exploration and production company that trades on the London stock market. Assume that when purchased by an international investor the stock's price and the exchange rate were £5 and £0.64/$1.00 respectively. At selling time, one year after the purchase date, they were £6 and £0.60/$1.00.
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-Calculate the investor's annual percentage rate of return in terms of the U.S.dollars. (Do not round intermediate calculations.)

Question

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Purchase price in U.S. dollars = £5.0/0.64 = $7.81Selling price in U.S. dollars = £6/0.60 = $10.00Therefore, the dollar rate of return is:R($) = [($10 - $7.81)/$7.81] × 100 = 28%

Emerald Energy Is an Oil Exploration and Production Company That