标题: Can you clear up the confusion I have bout this formula? [打印本页] 作者: Viceroy 时间: 2011-7-13 13:31 标题: Can you clear up the confusion I have bout this formula?
Two formulas for domestic return on a foreign portfolio:
1) Return=Capital Gain + Currency Appreciation + (Capital Gain)(Currency Appreciation)
2) Return=Capital Gain + Income Yield +Currency Effect,
where Currency Effect=e*(1+Capital Gain+Income Yield).
When do I use 1) or 2)?作者: Windjammer 时间: 2011-7-13 13:31
Sorry I don't understand desperatestudent. What do you mean?作者: canadiananalyst 时间: 2011-7-13 13:31
i thought they are both the same except 1 assumes no recurring income (i.e rental income) but only capital gain whereas 2 assumes there are income and capital appreciation. Note the currency effect affect income and capital gain components.作者: zwjy 时间: 2011-7-13 13:31
equation 1 = fully hedged...
equation 2 = only the principal is hedged
equation rarely happens unless they specifically tell you.
