International investment returns
Personal Finance Problem Joe? Martinez, a U.S. citizen living in? Brownsville, Texas, invested in the common stock of? Telmex, a Mexican corporation. He purchased 3,000 shares at 18.00 pesos per share. Twelve months? later, he sold them at 22.00 pesos per share. He received no dividends during that time.
a. What was Joe's investment return? (in percentage? terms) for the year, on the basis of the peso value of the shares?
b. The exchange rate for pesos was 10.08 pesos per US$1.00 at the time of the purchase. At the time of the sale, the exchange rate was 10.64 pesos per US$1.00. Translate the purchase and sale prices into? US$.
c. Calculate? Joe's investment return on the basis of the US$ value of the shares.
d. Explain why the two returns are different. Which one is more important to? Joe? ? Why?