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14 January, 21:51

One year ago, a U. S. investor converted dollars to yen and purchased 100 shares of stock in a Japanese company at a price of 3,150 yen per share. The stock's total purchase cost was 315,000 yen. At the time of purchase, in the currency market 1 yen equaled $0.00952. Today, the stock is selling at a price of 3,465 yen per share, and in the currency market $1 equals 145 yen. The stock does not pay a dividend. If the investor were to sell the stock today and convert the proceeds back to dollars, what would be his realized return on his initial dollar investment from holding the stock?

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  1. 15 January, 00:42
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    Answer: - 20.31%

    Explanation:

    A year ago, a United States investor converted dollars to yen and bought 100 shares of stock in a Japanese company at price of 3,150 yen per share. At that time of purchase, 1 yen equaled $0.00952.

    Total cost = 3150*100 yen = 315000 yen

    = 315000 * 0.00952 = $2998.8

    Today, the stock sells at a price of 3,465 yen per share, and in the currency market $1 equals 145 yen.

    Total selling price=3465 * 100 = 346500 yen = 346500/145 = $2389.7

    Return = (2389.7-2998.8) * 100/2998.8

    = - 20.31%
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