Positively affected by exchange rate

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An American mutual fund manager decides to use $1,000,000 to purchase shares of a Mexican company. At the time of purchase, the stock sold for 25 pesos/share and the exchange rate was 1 peso = $.10. One year later, the manager sells all of her stock at a price of 35 pesos per share and converts her pesos back to dollars at a rate of $.12/peso. The manager's return was positively affected by exchange rate risk.

Reference no: EM132224215

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