What was the investor u.s. dollar return

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A U.S. dollar-based investor buys shares in a yen-denominated Exchange Traded Fund (ETF) that replicates the market on December 31. The ETF buys shares in exact proportion to their weights in the Nikkei stock market index, so the returns to the investor on the stocks will be the same as the index returns. The Nikkei is trading at 10,391.92 and the exchange rate is 86.84 yen per dollar. The investor closes out the trade on March 18 of the next year. At that time the Nikkei is trading at 12,220.63 and the exchange rate is 95.26 yen per dollar.

Could you please help me with the following two questions:

(1) What was the investor's U.S. dollar return, in percent, on this transaction?

(2) I think investor would gain on currency transaction. Is that correct? Did the investor lose on the stock market transaction?

Reference no: EM132477768

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