I’m confused by the calculation for the Cj part for LOS 47a, which says Rjd = CGj + CFj + Cj, where Cj = e* (1 + CG + CF) In the first EOC problem in the curriculum they don’t use the formula and simply figure out the foreign return in both the domestic and foreign currency and subtract them to get the currency effect. I tried solving it with the formula but didn’t get the same answer.
You definitely should get the same number. Cj is the sum of C and D boxes in exhibit 2 pg 208 which again is = change in spot* (Final value of portfolio in local currency)
using the formula, you would get the following: (5.4/6 - 1)*(1+30%+0%) = -13%
Thanks. I looked at it several times and made a careless error