Return on Foreign Investment
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1. An investor in the USA bought a one-year Singapore security valued at 200,000 Singapore dollars. The US dollar equivalent was $100,000. The Singapore security earned 15 percent during the year, but the Singapore dollar depreciated 5 cents against the US dollar during the same time period ($0.50/SD to $.045/SD). After transferring the funds back to the USA what was the investors return on his $100,000? Determine the total ending value of the Singapore investment in Singapore dollars and then translate this value to US dollars by multiplying by $0.45. Then compute the return on the $100,000.
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Solution Summary
Calculates the return in foreign currency terms and home currency terms.
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1. An investor in the USA bought a one-year Singapore security valued at 200,000 Singapore dollars. The US dollar equivalent was $100,000. The Singapore security earned 15 percent during the year, but the Singapore dollar depreciated 5 cents against the US dollar during the same time period ...
Purchase this Solution
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