Response to the following problem:
Lola Paretti purchased 50 shares of BMW, a German share traded on the Frankfurt Exchange, for 35 euros per share exactly one year ago, when the exchange rate was A 0.6354/A$1. Today the share is trading at A 38 per share, and the exchange rate is A 0.7064/A$1.
a. Did the euro depreciate or appreciate relative to the Australian dollar during the past year? Explain.
b. How much in Australian dollars did Lola pay for her 50 shares of BMW when she purchased them a year ago?
c. How much in Australian dollars can Lola sell her BMW shares for today?
d. Ignoring brokerage fees and taxes, how much profit (or loss) in Australian dollars will Lola realise on her BMW shares if she sells them today?