What is the rate of return to the Swiss investor?

Intermediate Financial Management (MindTap Course List)
13th Edition
ISBN:9781337395083
Author:Eugene F. Brigham, Phillip R. Daves
Publisher:Eugene F. Brigham, Phillip R. Daves
Chapter27: Multinational Financial Management
Section: Chapter Questions
Problem 7MC
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A year ago, a Swiss investor bought a 1-year U.S. Treasury security at a price of $9,708.74, with a maturity value of $10,000.  The exchange rate at that time was 1.420 Swiss francs per dollar.  Today, at maturity, the exchange rate is 1.324 Swiss francs per dollar.  What is the rate of return to the Swiss investor? 

(You must explain your approach to solve the problem in writing and explain the effect of exchange rate on the rate of return. No credit is given without the explanation.)

 

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