A Peruvian investor buys 150 shares of a U.S. stock for $6,600 ($44 per share).

Question

A Peruvian investor buys 150 shares of a U.S. stock for $6,600 ($44 per share). Over the course of a year, the stock goes up by $6 per share.

If there is a 10 percent gain in the value of the dollar versus the nuevo sol, what will be the total percentage return to the Peruvian investor? (Do not round intermediate calculations. Round your final answer to 2 decimal places. Omit the "%" sign in your response.)

Now assume that the stock increases by $7, but that the dollar decreases by 10 percent versus the nuevo sol. What will be the total percentage return to the Peruvian investor? Use .90 in place of 1.10 in this case. (Do not round intermediate calculations. Round your final answer to 2 decimal places. Omit the "%" sign in your response.)

A Peruvian investor buys 150 shares of a U.S. stock for $6,600 ($44 per share). Over the course of a year, the stock goes up by $6 per share.

If there is a 10 percent gain in the value of the dollar versus the nuevo sol, what will be the total percentage return to the Peruvian investor? (Do not round intermediate calculations. Round your final answer to 2 decimal places. Omit the "%" sign in your response.)

Explanation / Answer

a. Stock price after 1 year including dollar appreciation = 50 x 1.1 = $55
Total Return = (55 - 44) / 44 = 25%

b. Stock price after 1 year including dollar depreciation = 51 x 0.9 = $45.9
Total Return = (45.9 - 44) / 44 = 4.32%

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