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# In March 2004, an American investor buys 1,000 shares in a M

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In March 2004, an American investor buys 1,000 shares in a Mexican company at a price
of 500 pesos each. The share does not pay any dividend. A year later she sells the shares
for 550 pesos each. The exchange rates when she buys the stock are shown in Table 28.1.
Suppose that the exchange rate at the time of sale is peso \$12.0/\$.
a. How many dollars does she invest?
b. What is her total return in pesos? In dollars?
c. Do you think that she has made an exchange rate profit or loss? Explain.

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#### Solution Preview

In March 2004, an American investor buys 1,000 shares in a Mexican company at a price
of 500 pesos each. The share does not pay any dividend. A year later she sells the shares
for 550 pesos each. The exchange rates when she buys the stock are shown in Table 28.1.
Suppose that the exchange rate at the time of sale is peso \$12.0/\$.

a. How many dollars does she invest?

1,000 shares x ...

#### Solution Summary

This solution is comprised of a detailed explanation to answer how many dollars does she invest.

\$2.19