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pamela sirota
on Nov 28, 2024

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Suppose 6 months ago a British investor bought a 6-month Canadian Treasury bill at a price of $9,708.74,with a maturity value of $10,000.The exchange rate at that time was 1.9516 dollars per pound.Today,at maturity,the exchange rate is 2.0751 dollars per pound.What is the annualized rate of return to the British investor?

A) -6.26%
B) -3.13%
C) 6.00%
D) 8.25%

Annualized Rate of Return

The annualized rate of return is a way of calculating investment returns on an annual basis, taking into account the effect of compounding over the period.

Treasury Bill

Short-term government securities with maturity periods of one year or less, issued at a discount to their face value.

Exchange Rate

The value of one currency for the purpose of conversion to another, used in international trade and investment.

  • Assess the effects of currency depreciation or appreciation on global trade and investments.
  • Examine the fiscal dangers linked to global business activities, encompassing exchange rate risk and political risk.
  • Comprehend the fundamentals of interest rate parity and its impact on foreign exchange rates.
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CG
Carolyne GuzmanDec 01, 2024
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