On page 139 (Schweser B4), there is a section of “Cost of equity” for emerging market. Is it discussing the extended CAPM model? It’s like E(Ri)=Rf+beta*RP, where Rf=TBond+inflation difference. RP is the global market risk premium. But Rf is the domestic risk-free rate in extended CAPM.
No, it’s not taking into account the foreign currency risk premium that is inherent in the investment, as far as I know.
Is there such a thing called Exchange Rate Risk? I heard a Foreign Currency Risk and Real Exchange Rate Risk. What else for currency related risks?