Return on foreign bond CFAI mock currency, included, question

soverby

Got this question right, but not exactly the same answer as they had.

They basically say the return = i. on bond +/- currency appr/depr + (i. on bond * currency appr/depr).

I've never seen this part "(i. on bond * currency appr/depr)" included for this calculation.

chaojimali

this is the R + S + R*S

R*S is usually small - so it is ignored

(1+r) (1+s) - 1 = r + s + rs

CP

Uranus08

I did the exact same thing and got it right but I question if CFAI would potentially include a choice close enough that you would have to know the exact way. I realize it's not much more to remember, but when youve spent so much time programming something in your head it messes you up.....