CFAI vol. 4 page 154 problem # 20: Problem asks for hedged return. The solution shows the calculation involving risk premiums. I am totally confused.
For Domestic Investor/ PM Unhedged Return = RL+C Hedged Return=id+(RL-if) RL is return in local currency. id /if are Interest rates in domestic and foreign countries. C is currency return
please refer to P.135 HR = id + (rl-if)
Thanks guys-I got it.