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Decompose the Return an American Would Have If He Had

Question 95

Multiple Choice

Decompose the return an American would have if he had bought a German stock at €100 per share and sold it one year later at €120. The spot exchange rate one year ago was $1.50 = €1 and the spot rate prevailing at the end of the year was $1.55 = €1.


A) 24% total return; 20% asset return; 4% attributable to exchange rate changes
B) 20% total return; 16.77% asset return; 3.23% attributable to exchange rate changes
C) 24% total return; 20% asset return; 3.33% attributable to exchange rate changes
D) None of the above

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