Currency Contribution Dollar Return on Index individual, allocation, comparing, currency, against

bchadwick

For the GPE when you are comparing performance against a World Index. For the currency allocation effect, they compare the currency contribution of the individual portfolio holdings to the currency contributions of the index.

How do they arrive at the Dollar Return for the Index Values? On page 254 of Reading 47, CFAI Volume 6. The chart near the bottom that says "Index Return Breakdown" how did they calculate the Dollar Return figures of 10.417 and -2.64?

This GPE is tough stuff.

pennyless

You have to take the index values and convert everything to dollars in both periods using the relevant exchange rates. The % change will give you 10.417 and -2.64.

I had to lay out everything in a spreadsheet, otherwise it's easy to get lost.

UK Beg $ Value: 1090/.65 = 1676.923077
UK End $ Value: 1148/.62 = 1851.612903

Change = (1851.612903/1676.923077)-1 = 0.104172832

France Beg $ Value: 950/1.1 = 863.6363636
France End $ Value: 1009/1.2 = 840.8333333

Change = (840.8333333/863.6363636)-1 = -0.026403509

NO EXCUSES

former

Bpuldog, thanks. I was missing using Index Values/Exchange Rate. Thanks! I think i got this almost. Been on these EOC questions for two days now trying to get this down pat.