Logo
Home Study Material Contact Search
AI Chat FREE
  1. business
  2. finance
  3. an english institutional investor has invested in

An English institutional investor has invested in a portfolio of stocks in Russia. The annual inflation...

60.1K

Verified Solution

Question

Finance

An English institutional investor has invested in a portfolio ofstocks in Russia. The annual inflation rate is 6 percent in Russiaand 2.5 percent in the England.

Suppose that the annual return on the portfolio is 12 percent inRussian rubles, and the Russian ruble depreciated with respect tothe pound by 5 percent. Also suppose that a Russian institutionalinvestor also held a portfolio with the same composition. Comparethe real returns for both investors, and discuss why they do or donot differ from one another.

Answer & Explanation Solved by verified expert
4.3 Ratings (859 Votes)
Answer 1 First calculating real return for English institutional investor There is a 12 return in Russian rubles which is notional return To calculate Notional return for English investors we must incorporate currency exchange depreciation in return as Russian rubles is weaker than a pound at year end This means    See Answer
Get Answers to Unlimited Questions

Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!

Membership Benefits:
  • Unlimited Question Access with detailed Answers
  • Zin AI - 3 Million Words
  • 10 Dall-E 3 Images
  • 20 Plot Generations
  • Conversation with Dialogue Memory
  • No Ads, Ever!
  • Access to Our Best AI Platform: Flex AI - Your personal assistant for all your inquiries!
Become a Member

Transcribed Image Text

An English institutional investor has invested in a portfolio ofstocks in Russia. The annual inflation rate is 6 percent in Russiaand 2.5 percent in the England.Suppose that the annual return on the portfolio is 12 percent inRussian rubles, and the Russian ruble depreciated with respect tothe pound by 5 percent. Also suppose that a Russian institutionalinvestor also held a portfolio with the same composition. Comparethe real returns for both investors, and discuss why they do or donot differ from one another.

Other questions asked by students

Q

Use Examples 4.16 to determine the  hybridization for each central atom ( respectively C, C, O, N)in...

Chemistry
Q

Assume the one and two year spot rates on the zero curve, Rf (0, 1) and...

Finance
Q

Although slavery alienated most slaves from the American tradition one exception was the black poet...

Biology
Q

Line c has an equation of y = -1/3x - 4. Line d is perpendicular...

Basic Math
Q

What is Regulation Z and how is it used in consumer transactions. How effective is...

Accounting
Q

(a) Mrs Kamau reported the following information relating to her income for the year ended...

Accounting
Q

The term Kakure Krishitan refers to what socio/religious phenomena in Japan? Loosening of isolationist policies...

Accounting
Q

The Victoria Telephone Company has a $1,000 par value bond outstanding that pays 11 percent...

Accounting
Q

Way Cool produces two different models of air conditioners. The company produces the mechanical systems...

Accounting
Q

On April 1, Jiro Nozomi created a new travel agency, Adventure Travel. The following transactions...

Accounting
Q

Many Web-based employment sites have sprung up on the Internet. At first, your boss was...

Accounting
Q

Class Work 1 The following events pertain to a partnership formed by Papa Hubert and...

Accounting