infinitybenzo

Paraguay Wrote:
-------------------------------------------------------
> deriv108 Wrote:
> --------------------------------------------------
> -----
> > You are an American with a holding in Japan
> that
> > moved up in value from 100 to 125 JPY and at
> the
> > same time the Japanese currency depreciated by
> > 10%. (100 JPY/USD to 110 JPY/USD)
> >
> > State what are the:
> >
> > Total Return
> > Local Return
> > Return segmented by capital gains, currency and
> > yield.
> >
> > Total return:
> > R=(125/100)*[(1/110)/(1/100)]-1=1.136-1=13.6%
> > Local return=125/100-1=25%
> >
> > R(cg)=25%
> > R(currency)=13.6%-25%=-11.4%
> > R(yield)=0
>
> I hate their rounding, it is so very inconsistent.
>
>
> In 2000 exam they had a PV factor that was taken
> out 9 places. 9 places. At least 2 places after
> the decimal seems logical however.

Agreed...I believe your approach is much faster, but it's too late for me to learn your way to solve this kind of problem. The result look the same.