The shares of Microsoft were trading on NASDAQ on

January #4563
The shares of Microsoft were trading on NASDAQ on January 1 at $41. A Swedish investor
purchased 100 shares of Microsoft at that price. The Swedish kroner to dollar exchange rate
then was $:Skr = 9.4173-9.4188. One year later, the investor received a dividend of $2 per
share, and the investor then sold the shares at a price of $51 per share. The exchange rate at
that time was $:Skr = 9.8710-9.8750. The dividend withholding tax rate in the United States is
15 percent and there is a tax treaty between the United States and Sweden that allows the U.S.
withholding tax to be used as a tax credit in Sweden. Suppose the Swedish investor is taxed at
50 percent on income and 15 percent on capita] gains, and ignore any commissions on
purchase and sale of shares.a. What is the gross rate of return on the investment, in dollars?b.
What is the gross rate of return on the investment, in kroners?c. What is the rate of return on
the investment, in kroners, net of taxes?View Solution:
The shares of Microsoft were trading on NASDAQ on January

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