A
person has invested USD 100,000 in US equities with a view of appreciation of
US stock market next one year, his investments in US equities appreciated in
value to USD 115,000. The investor decided to sell off his portfolio and
repatriate the capital and profits to India. However, at the time of converting
USD to INR, he received an exchange price of 44 as against 47. what is the
return of the USD and INR?
a)
10%, 7%
b)
15%, 7.6%
c)
7.06, 10%
d)
10%, 5%
Explanation:
The value of investing increased from USD 100,000 to USD
115,000 in one year. Therefore the return in USD would be:
(115,000-100,000)/100,000=0.15 and in percentage terms it would be 15%.
In INR terms, the value of investment at the beginning was
4,700,000 and at maturity it is 5,060,000 (44*115,000). Therefore the return in
INR is: (5,060,000-4,700,000)/(4,700,000)= 0.076 and in percentage terms it
would be 7.6%
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