Two questions that always trip me up counter, question, fiduciary, domestic

bigredhockey55

]I always seem to mess these up.

FIRST

In PM, when calculating the FCRP = E(S)-S / S - (Rdc - Rfc)

Which is domestic and which is foreign? Can you explain using 'base' and 'counter', as this would help me greatly.

SECOND

In Ethics, the typical Prudent Man Rule vs. Prudent Investor Rule questions are about their differences. But there have been occurrences where a question has asked how they are similar? Do you know where they are similar? (besides the whole fiduciary duty thing...)

Thanks

iteracom

1) I would skip the base & counter BS, and just think of it as a stock price target. Find the expected foreign currency change based on the rates they give you. This is your target/expectation. Then look at int rate differential and say oh, it would go up or down by this much, say 5%, but i expect the currency to change by 7%, so the difference of 2% means if we are correct, the investing in that currency has the potential to increase returns by 2%.

2) Just know the differences between those. There are a couple similarities like "handle with care/prudence etc...". But the differences are more important.