in international asset pricing model, is the assumption same as CAPM? in the formula, given R(DC)=R(LC)+1 exposure, should we use R(DC) or R(LC) in the formula,? I’m a US citizen, if I invest in London, foreign currency is GBP, when E(S)>F, FCRP>0, should I use forward to hedge foreign currecy risk or should I do not hedge, which is better?

I’m not totally solid on this topic. but When F rates are unbiased predictor of E(s) there is no FCRP, therefore the investor can remain hedged and get the same return. When there is FCRP, this is what the investor can gain by remaining unhedged and taking on inflation(?) risk.