Foreign Investment Returns all, why, Investment, Shanghai, recently

bchadwick

Can someone explain why dividends weren’t realized?
Simon Rosen, CFA, a portfolio manager for the Asian Spec Fund, recently purchased 1,000 shares of China Petroleum at a price of 271.11 Chinese yuan (CY) on the Shanghai Stock Exchange. The current exchange rate at the time was 8.2781 CY to one USD. China Petroleum paid an annual dividend of 9.02 CY per share and dividends are subject to 10 percent withholding tax. Capital gains taxes and dividends are 20 percent for the U.S. Simon sold all of his holdings in China Petroleum one year later at a price of 325.33 CY. Assume that the U.S. tax laws allow a full tax credit for taxes paid on international investments. Further assume that over the course of the year, exchange rates remained constant. The amount of capital gain after taxes are paid on the sale (in U.S. dollars) is:
A) USD 43,376.05.
B) USD 6,549.81.
C) USD 5,239.85.
ANSWER: C) USD 5,239.85.
Gross proceeds on the sale (USD) = (325.33 CY

dmar

What do you mean?
The question only asks for capital gains. Dividends might have been realized but it was never asked in the question.

LBriscoe

Capital gains + dividend = total return