For question 6, I am not getting the correct answer and I just wanted to confirm the formula I had been using as a default is correct and if so what nuance I am missing.
Hedged Return = RFd + (Rif - RFF)
where: RFd = domestic risk free rate; Rif = return on asset in foreign currency; RFF = foreign risk free rate.
The answer key uses the forward discount plus the local return to derive their answer. I am not sure what I am missing or where the disconnect is.
Thanks in advance.