What is the overall rate of return on the portfolio

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One year ago, an American investor bought 1000 shares of London Bridges at a price of £62 (or 62 UK pounds) per share when the exchange rate was $1.5/1£ (or $1.50 dollars = 1 pound). The investor also invested 1,800,000 Japanese Yen in a money market fund in Japan last year when the exchange rate was 85 Yen = $ 1 US.

(a) Using current exchange rates, what is today's value of the investor's portfolio in U.S. dollars if the UK investment decreased 5% (in local currency) and the Japan investment increased 1% (in local currency)?

(b) What is the overall rate of return on the portfolio over the last year?

 

Reference no: EM13267138

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