currency movements and portfolio rate of return return

NakedPuts

Quiz time!

You invest in a fund denominated in euros. The fund's return for the period is 8%. The euro depreciates 2% vs your domestic currency. Div yield for the period is 1%. What is the portfolio's rate of return in your base currency for the period?

Giddy up.

ll11

that's what i got too when i stuck the formula for these random #'s. good man, goodman.
SS17.

former

Should be .08 + .01 + -.02(1+.08 + .01) = 6.82%

oneboy

correct sir. i was reviewing SS17 and that was just one of those little formulas that i totally forgot was even out there. figured i'd just post it up. it's simple. just need to refresh the ol' memory.

nannan66

could you please give reference to the page.. i can't find that formula in SS17 in schweser books

bboo

i think the question must differentiate between return from capital appreciation and income

Windjam

YUP its chapter 47.

TOTAL RETURN IN BASE CURRENCY= capital gain component + yield component + currency component

NakedPuts2011

Just a different dimension to the wording of the above question.

What is to ascertain that the dividend yield of 1% is not already included in the fund's return for the period stated as 8%!

wake2000

Question - on some questions, we include the -.2*8% as the third leg and other times we do not. What is the "rule' on this?

mp3bu

Paraguay, why did you put the "1" in the last part of your formula? Doesnt that effectively add a 100% gain to the currency effect in addition to the +.08 and +.01 gains? I've seen formulas where it would make the last term in the formula contain -.02(.08 + .01)...when do we need to add the "1" and when do we keep it out?