Question

The spot rate of the Singapore dollar is $.75. The ADR of a Singapore firm is...

The spot rate of the Singapore dollar is $.75. The ADR of a Singapore firm is convertible into 2 shares of stock. The price of an ADR is $20. What is the share price of the firm in Singapore dollars?​

Group of answer choices

13.35

1.50

7.50

10.00

none of the options listed

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Homework Answers

Answer #1

Answer

Option A SGD 13.35 is correct

Workings

Price of ADR = $20

Step 1 - Calculation of price of ADR in terms of Singapore dollar (SGD)

Price of ADR in Singapore dollar at exchange rate 1 SGD = 0.75 US $

1 SGD = 0.75 US$

1 US$ = 1 / 0.75 SGD

20 US $ = [1 / 0.75] * 20 SGD

20 US $ = 26.66 SGD

Therefore price of ADR in SGD = 26.66 SGD

Step 2 - Calculation of share price in SGD

It is given in the quesion that 1 ADR comprise of 2 shares of Stock, and we have calculated the price of ADR in SGD in step 1 above.

Price of Share in SGD = Price of ADR in SGD / Number of shares in ADR

Price of a Share in SGD = 26.66 / 2 = 13.35

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