Suppose You Start with $100 and Buy Stock for £50

Multiple Choice

Suppose you start with $100 and buy stock for £50 when the exchange rate is £1 = $2.One year later,the stock rises to £60.You are happy with your 20 percent return on the stock,but when you sell the stock and exchange your £60 for dollars,you only get $45 since the pound has fallen to £1 = $0.75.This loss of value is an example of

A) exchange rate risk.
B) political risk.
C) market imperfections.
D) weakness in the dollar.