The total dollar return on a foreign security can be decompo

The total dollar return on a foreign security can be decomposed into (a) dividend/interest income (b) currency gains (losses) (c) capital gains (losses) (d) all of the above (e) None of the above

Solution

The correct option is (d)

The total dollar return on a foreign security can be decomposed into dividend/interest income, currency gains or losses and capital gains or losses. When an investment is made in a foreign security, there may be a dividend or interest income on such investment. Since the investment is made in a foreign security, when the foreign exchange rate fluctuates, there may be currency gains or losses. When a security is sold, there may be capital gains or losses. If the selling price is more than cost price of the security, there is a capital gain and if cost price is more than selling price, there is a capital loss.

Hence, the correct option is (d)