Page 38 - Demo

%u062c%u0645%u064a%u0639 %u0627%u0644%u062d%u0642%u0648%u0642 %u0645%u062d%u0641%u0648%u0638%u0629 %u0640 %u0627%u0625%u0644%u0639%u062a%u062f%u0627%u0621 %u0639%u0649%u0644 %u062d%u0642 %u0627%u0645%u0644%u0624%u0644%u0641 38 %u0628%u0627%u0644%u0646%u0633%u062e %u0623%u0648 %u0627%u0644%u0637%u0628%u0627%u0639%u0629 %u064a%u0639%u0631%u0636 %u0641%u0627%u0639%u0644%u0647 %u0644%u0644%u0645%u0633%u0627%u0626%u0644%u0629 %u0627%u0644%u0642%u0627%u0646%u0648%u0646%u064a%u0629Effects of Changes in the Exchange Rate on Securities Return:When investing internationally, the investor's returns from his international portfolio are affected by changes in the exchange rate between his local currency and the international currency in which he earns his returns.The realized dollar returns for an Egyptian investor (for example) in a foreign market will depend not only on the return in the foreign market but also on the change in the exchange rate between the EGP and the foreign currency.%uf06c The realized dollar return for a U.S. resident investing in a foreign market is given by14:Ri$ = (1 + Ri)(1 + ei) %u2013 1orRi$ = Ri + ei + RieiWhere:Ri is the local currency return in the ith marketei is the rate of change in the exchange rate between the local currency and the dollarExample 2:If a U.S. resident just sold shares in a Japanese firm that had a 15 % return (in Yen) during a period when the Yen appreciated 5%, what is his dollar return?%uf06c Ri$ = (1 + Ri)(1 + ei) %u2013 1= (1 + .15)(1 + 0.05) %u2013 1 = 20.75%%uf06c Ri$ = Ri + ei + Riei= .15 + .05 + .15%u00d7(.05) = 20.75%Example 3:If a U.S. resident just sold shares in a British firm that had a 10% return (in pounds) during a period when the pound depreciated 4%, what is his dollar return?%uf06c Ri$ = (1 + Ri)(1 + ei) %u2013 1= (1 + .10)(1 - 0.04) %u2013 1 = 5.6%.%uf06c Ri$ = Ri + ei + Riei= .10 + %u2013.04 + .15%u00d7(-.04) = 5.6%.14 --Eun, C. S., & Resnick, B. G. (2012). International financial, edition Six, McGraw Hill.