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International Investing 14 Tyrone a US investor invests in his friend Richard

Question

International Investing:

14. Tyrone – a US investor – invests in his friend Richard

Burton’s country – UK. Tyrone has $20,000 to invest. He converts all the money to pounds and buys with all of it BP shares selling at £50 per share. After a year he sells all BP shares at £55 per share. If exchange rate at time 0 was $2.00 per £, and $2.10 per £ at the end of the year, what is Tyrone’s one-year US rate of return? (10)

(a) Find £ obtained:

(b) Find # of BP shares bought:

(c) Find £-denominated return:

(d) Find $-denominated return:

Finance

International Investing 14 Tyrone a US investor invests in his friend Richard