kingstongal

FCRP is used in the ICAPM, which is the international version of the CAPM. In the ICAPM, the particular asset has a certain exposure to each local currency in the 'universe'. Typically, the question assumes only two or three currencies exist in the 'universe', say Domestic currency, local currency a, and local currency b.

Remember that the asset's sensitivity to each local currency is its own sensitivity to its domestic currency plus 1. This is basically the asset's "beta", although it's actually denoted as a gamma.