A Swedish investor bought 200 shares of IBM on January 1 on the New York Stock Exchange at $120. The exchange rate was SEK/USD = 7.00. Over the year, the investor has received a gross dividend of $5 per share. There is a 15% withholding tax levied by the United States. The exchange rate at the time of dividend payment was SEK/USD = 7.2. By December 31, the investor resells the IBM shares at $125, but the exchange rate has dropped suddenly to SEK/USD = 6.75. Ignoring commissions, what is the rate of return on the investment, in dollars and kronas, gross and net of taxes? The Swedish investor is taxed at 50% on income and 15% on capital gains; the U.S. withholding tax can be used as a tax credit in Sweden.
