schweser Vs CFA: hedging the principal

quick thing for currency hedging, page 112 and 113 of schwser book 5: they get the profit of a short position in the futures as -(Ft - F0) x notional ok, makes sense, minus at the begining because you are short, etc, ok the difference with CFA is that: 1. CFA adds that result directly to the numerator of the formula to calculate return in your own currency (which is difference in your own currency between final value and initial value, divided by initial value) 2. This means that formula for the futures return, in % = (Ft - F0) / S0 , they use spot 0 in the denominator 3. Schweser does not do this. They calculate the unhedged return in your own currency (as CFA, the difference in your own currency between final value and initial value, divided by initial value), expressed in %, separated, and then they add the futures return in %, but that futures return is calculated as (Ft - F0) / F0 , they use F0 in the denominator (instead of S0, as CFA does) which one is correct? I guess that, unless there is a huge difference between F0 and S0, the difference will be very very small, but if this has to be done in an essay question where you must show calculations… thx

OH NO NOT AGAIN!!! Hala_Madrid there was an 80 Gazillion page thread about this…

wow, never seen it, going to search for it right now did they reach any conclusion, by the way?

hahahahha :slight_smile: I wrote in that one too!!! wow… I don´t even remember what I have written in this forum… I am taking a break inmediately

lol

Here you go - http://www.analystforum.com/phorums/read.php?13,679399 (that’s the one I found, there maybe more)