Assignment:
One year ago, an American investor bought 1000 shares of London Bridges at a price of £8 (or 8 UK pounds) per share when the exchange rate was $1.40/1£ (or $1.40 dollars = 1 pound). The investor also invested 6,000,000 Japanese Yen in a money market fund in Japan last year when the exchange rate was 75 Yen = $ 1 US.
(a) Using current exchange rates (Today's exchange rate: ¥77.7330 = $1, $1.5620 = £1) what is today's value of the investor's portfolio in U.S. dollars if the UK investment increased 6% (in local currency) and the Japan investment increased 2% (in local currency)?
(b) What is the overall rate of return on the portfolio over the last year?