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1. You hedge with forwards. Locking in 0.7% based on IRP (if it holds). So hedging makes sense in this case.
2. Hedged return= return of foreign asset + Fwd premium/discount (based on IRP), so if you rearrange it, you get hedged return=domestic RFR + the return on foreign asset minus foreign risk free rate. |
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发表于 2011-7-11 19:07
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