Reference no: EM131075752

Ben purchased 100 shares of stock from the Frankfurt (Germany) Stock Exchange at a price of €52 per share when the exchange rate was €1 = $1.30. He sold the shares less than a year later at a price of €63 per share when the exchange rate was €1 = $1.39. While he was holding the shares, he received €2 per share in dividends.

a. Find Ben’s total holding period return in U.S. dollars, rounded to the nearest percent. Show work.

b. Show how the total return found in part (a) breaks down into its components. In other words, find the return earned on the stock in local currency; then find the return from changes in currency exchange rates.