INTERNATIONAL FINANCE. You are evaluating investments in U.S. equities and Mexic

Question

INTERNATIONAL FINANCE. You are evaluating investments in U.S. equities and Mexican equities. Your stock analysts anticipate that U.S. equities will appreciate 9% over the next year. The Mexican equities are expected to rise 15%. Your foreign exchange analyst expects the exchange rate for Mexican pesos, MP, to change from $.14286/MP to $.142015/MP. What rate of return do you expect to earn on the Mexican equities? Note: be sure to convert all values to USD before calculating the percentage return.

9%

14.32%

15%

14.25%

None of the above

9%

14.32%

15%

14.25%

None of the above

Explanation / Answer

= 142015-14286

= 127729

=127729/ 14286

==9%

Ans. 9%

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