You invest NZD 8,000 in a US Vanguard ETF at a price of US$134.28. The current...
You invest NZD 8,000 in a US Vanguard ETF at a price of
US$134.28. The current NZD/USD exchange rate is 0.731.
In a year, the ETF trades at $141.10, and the NZD/USD exchange rate
is 0.759.
Compute your return on investment. Assume assets are divisible
(i.e., you can buy a part of an ETF)
Homework Answers
Amount converted = NZD amount invested*exchange rate = 8000*0.731=5848
Share bought = Amount converted/USD price = 5848/134.28=43.5507
Final amount in NZD = Share bought*final price/(NZD/USD) = 43.5507*141.1/0.759=8096.1841
Profit = Final amount in NZD-amount invested = 8096.1841-8000=96.1841
Return = profit/amount invested = 96.1841/8000=1.202%
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