Really just venting my frustration here but I’m finding the currency management section the most difficult to try get to grips with. Just too much confusion
my brain hurts 
goodluck my fellow CFA candidates
Dude, I abandonded that one early on. Too much time, not worth it, currencies have always kicked my butt…Good luck.
Some concepts are hard. I would first focus on nailing:
- Calculating domestic return of foreign investment (this includes currency return, might be hedged or not)
- Understand what hedging does (are you getting foreign/domestic risk-free rate?). Understand Interest Rate Parity->roll yield is negative if hedging a currency with higher interest rate
- Effect of correlation between foreign market and currency
- Given a scenario, should the manager hedge the currency. What is the general strategy
Here is a tricky example:
Wulf, based in Germany, invests in 180-day British pound investment for £5m. Spot rate is £0.78/€. Value in pound is expected to increase to £5.1m in 180 days. What is total rate of return from hedging the principal with futures. Assume Wulf hedges principal by selling £5m in pound futures at £0.79/€ and value of investment is £5.1m. When hedge is lifted, the futures rate is £0.785/€ and spot rate is £0.75/€.