What is the difference between ICAPM and extended CAPM?
The letter “I”! Was that an easy question in the q-bank? Qualitatively: Extended CAPM- makes 2 more assumptions about portfolio theory to apply it on an international context: 1. Investors have identical consumption baskets 2. PPP holds exactly at any point in time. ICAPM- requires investors to consider the real exchange rate associated with foreign currencies. (uses the formula for local/domestic currency sensitivities Y(DC) = Y(LC)+1)
Just found this, hopefully it helps: www.it.nccu.edu.tw/faculty/lkhu/IFM/97-2/ch04.ppt
Thanks, It really helps a lot.
Thanks, mp that’s more details than notes talked about
if you keep changing the figures, ch01, 02 …
^brilliant. CFA in a PPT.
Does any one have this PPT? I’m having trouble in digesting this concept :S