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An investor in the United States bought a one-year British security valued at 196,000 British pounds. The U.S. dollar equivalent was $98,000. The British security earned 17 percent during the year, but the British pound depreciated six cents against the U.S. dollar during the period ($0.50 to $0.45).

After transferring the funds back to the United States, what was the investor's return on her $98,000?

Determine the total ending value of the British investment in British pounds and then translate this British value to U.S. dollars

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This solution clearly determines the total ending value of the British investment in British pounds and then translates this British value to U.S. dollars.

Solution provided by:
Chris Busu, PhD (IP)
Education
  • BSc, University of Bucharest
  • MSc, Ovidius
  • MSc, Stony Brook
  • PhD (IP), Stony Brook
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