Homework Answers
Let the exchange rate at the time of investment be x NGN/MWK be x
Purchase value in terms of naira=100000*x NGN
Exchange rate after 1 year=x*(1-4%)=0.96 NGN/MWK
Sale value in terms of naira=106000*0.96x NGN
Nominal rate of return=(106000*0.96x-100000x)/(100000x)=1.76%
So, Given statement is false
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