If a U.S. investor in a German company traded only in Germany earned an annual return of 15% on the stock and 8% on the mark's exchange rate, his actual total return is

Question

Quizplus · Accepted Answer

To calculate the actual total return, we need to use the formula: 
Total return = (1 + return from stock)*(1 + return from exchange rate) – 1 
= (1 + 15%)*(1 + 8%) – 1 
= 1.15*1.08 -1 
= 0.242 or 24.2% 
Therefore, the answer is C.

If a US Investor in a German Company Traded Only in Germany