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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-If the investor had sold £5,the principal investment amount at the same time that the stock was purchased,forward at the forward exchange rate of £0.60/$1.00,the dollar rate of return would be: (Do not round intermediate calculations.)

Question

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When £5 is sold forward, the investor has a profit of£5 × (1/0.60 - 1/0.64) = $0.52Therefore, the overall return = [($10 - $7.81 + $0.52)/$7.81] × 100 = 34.67%

Emerald Energy Is an Oil Exploration and Production Company That