Effective yield earned by the investor


Foreign securities. A U.S. investor obtains Mexican pesos when the peso is worth $0.12 and invests in a one-year security that provides a yield (in pesos) of 22 percent. At the end of one year, the investor converts the proceeds from the investment back to dollars at the prevailing spot rate of $0.11 per peso. What is the effective yield earned by the investor?

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Finance Basics: Effective yield earned by the investor
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