NakedPuts00

Paraguay Wrote:
-------------------------------------------------------
> LobsterBoy Wrote:
> --------------------------------------------------
> -----
> > Here is perhaps an easier way to do it:
> > Rd= Domestic return
> > Rlc = Local currency return = Capital Gain +
> Yield
> > Income = .08 +.01 = .09
> > S = currency spot appreciation = -0.02
> >
> > Rd = Rlc + S + Rlc * S
> > Rd = .09 + -0.02 + (.09)(-0.02)
> > Rd = .0682
>
> Obviously this is unhedged return. We got a bit
> off track here though.


I don't see whats wrong with LobsterBoy's calculation, both formulas work out to be the same and can be derived from one another, so I don't understand what you mean by saying it is the unhedged return?