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. Calculate the investor's annual percentage rate of return in terms of the U.S. dollars.

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The stock price increased from £5 to £6, a 20% increase in pounds. The exchange rate changed from £0.64/$1.00 to £0.60/$1.00, meaning the pound appreciated against the dollar. The effective dollar return is calculated by considering both the stock price increase and the exchange rate change: (6/5) * (0.64/0.60) - 1 = 28%.

Emerald Energy Is an Oil Exploration and Production Company That