Assume that you have invested $100,000 in Japanese equities. When purchased the stock's price and the exchange rate were ¥100 and ¥100/$1.00 respectively. At selling time, one year after purchase, they were ¥110 and ¥110/$1.00. The dollar rate of return would be:

Question

Quizplus · Accepted Answer

The stock price increased by 10% (from ¥100 to ¥110), and the exchange rate also changed from ¥100/$1 to ¥110/$1, which means the currency appreciation offsets the stock price gain, resulting in a 0% dollar return.

Assume That You Have Invested $100,000 in Japanese Equities