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 50 as against 47. what is the return of INR?

     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 50 as against 47. what is the return of INR?

    a) 10%

    b) 22%

    c) 25%

    d) 24%

    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 5,750,000 (50*115,000). Therefore the return in INR is: (5,750,000-4,700,000)/(4,700,000)= 0.22 and in percentage terms it would be 22%