Was looking over the Schweser tests ( I didn’t use their books) and in the last test they have a BE spread question for an investor in Australia evaluating two bonds, 1 in country X, and one in country Y. It seems to me that they made an error, in how they did calculated the answer or at least I don’t understand it (probably the case). They calculate yield advantage w/o currency as 4.55-7.05= -2.5 and then they calculate fx premium of 2.6. So total yield advantage is 0.1 I get all that. Why dont they take into condideration the forward discount or premium for currency Y. I think the yield advantage/ disadvantage should be: [4.55+(4.55-3.05)]-[7.05+(4.55-5.65)]=0.1 Never mind. The math works out the same, but they dont explain it very well.

these were from 05 and 06 LOSes…The formulas were later removed… Now we have the GPE formulas.

GPE? Oh S%^&! I don’t know what that stands for. I bet there is a whole vignette on it…

what’s GPE? is the currency-adjusted B/even completely gone now? i hope so.