For Currency, can I say the hedged return is the % difference between the spot rate and the forward rate and the unhedged return is the % dif between spot rate (at time =0 ) and spot rate (at time =T)
Why profit or loss on a hedged stock position is cal as the following equation?
V(t)S(t)-V(0)S(0)- V(0)( F(t)-F(0) ). For the last term, why use the ( F(t)- F(0) ) instead if F(t)- S(t)?
Where v(t) is spot value at maturity ,F(t) is the forward rate at maturity .