here is a question I have seen tin he hedge or not to hedge questions where we have seen the formula for return of a foreign asset in base terms as: r () = r(lc) + s% I have also seen in schweser (page 95 volu 5) where the return on a foreign asset as: r() = r(lc) + %s + [r(lc)*%s] which one is correct to determine the return (either stock or bond) any takers? thanks

the second one, the first one is an approximation the second one is even more important when you are in a question where capital gain and div yield, where you return = cap.gain + yield + currency% x (1 + cap.gain + yield)

thanks Hala. so you are saying both are okay, but the first we use as an approximation for those hedge or not to hedge type of questions? I hope there are no questions that combines a) the currency effects and b) hedge or not to hedge. it would get messy.