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- Problem #1- Reading 44- Who is local investor??

First off, do we just assume in this question that we are a swedish investor?? because it says “valuation and performance analysis is done in swedish kroner??

This is the only way I can make sense of the currency contribution question then.

(SKR return on us stocks is 17% and dollar return on US stocks is 30% therefore since we are 50% invested in us stocks, this would be a portfolio currency contribution of
-6.5%

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Base Currency = Swedish Kroner so your Swedish today :)

im trying to put this in lamens terms. Is this therefore saying “you are a swedish investor who owns us stocks. In SKR you made 17%, but the local/us/$ return when transferred at the exchange rates given , returned 30%, therefore this means that since SKR appreciated relative to the us dollar from skr6/$ to skr5.4/$, THE SWEDISH INVESTOR WAS HURT ON HIS US INVESTMENT SINCE THE HOME CURRENCY SKR APPRECIATED??? SO 17% SKR RETURN ON US STOCKS- 30% DOLLAR RETURN ON US STOCKS IS A -VE13% CURRENCY CONTRIBUTION OF THE US INVESTMENT???

Yes Local = $ and Base = SKr

Hey wil, thanks for the response. So does this work exactly in the opposite as well?

I.e lets say our USSTOCKS in skr (home) stays same at 17%. (702,000skr/600000skr)-1

So taking the opposite approach, lets say that instead of above where SKR appreciated (from skr6/$ to Skr5.4/$)…… we say that SKR Depreciated relative to dollar…. (from skr6/$ to Skr10/$)

Therefore our us stock portfolio in dollar terms is (702,000/10)/(600000/6)-1 = -30%

So we would say in this case that our currency contribution was “47%”???

Is this correct?