Essay
Calculate the euro-based return an Italian investor would have realized by investing €10,000 into a $50 American stock using 50% margin. One year after investment, the stock pays a $1 dividend, and sells for $54 the exchange has changed from €.625 per dollar to €.6875 per dollar. The interest on the margin loan is 1% per year. The margin loan was denominated in dollars.
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Our investor's initial endowment is $16,...View Answer
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