Wouldn’t it be, For an American investor, Y(LC) is the sensitivity to the local currency (say Euros) Y(LC) + 1 = Y(DC) is the sensitivity to the domestic investor (USD) which would be the sensitivity to the stock to the exchange rate plus the exchange rate itself or Y(LC) = Y(DC) - 1 Or am I wrong?
FVIT (furture value interest factor): Investment income tax: [1 + R(1-t)]^N Deferred capital gains tax: [(1+R)^N*(1-t) + t] Deferred capital gains tax (MV != cost basis): [(1+R)^N*(1-t)] + tb Wealth-based tax: [(1+R)*(1-t)]^N Return after realized taxes: R*(1-sum(Pi*ti)) TDA(401k): (1+R)^N*(1-T) TEA(roth IRA): (1 + R)^N accrual equivalent after-tax return R(AE) & tax rate T(AE): FV/PV=[1+R(AE)]^N R(AE)= R*[1-T(AE)] Tax drag = ?
TheAliMan Wrote: ------------------------------------------------------- > Wouldn’t it be, > > For an American investor, > > Y(LC) is the sensitivity to the local currency > (say Euros) > Y(LC) + 1 = Y(DC) is the sensitivity to the > domestic investor (USD) which would be the > sensitivity to the stock to the exchange rate plus > the exchange rate itself > > or Y(LC) = Y(DC) - 1 > > Or am I wrong? I think you’re right, I had it backwards —> my formula above should be Y(LC) = Y(DC) - 1
I’m just having a hard time remembering all these theories… and of course all the assumptions that come with them.
deriv108 Wrote: ------------------------------------------------------- > Tax drag = ? Tad Drag is like the % of the money you lost because of tax. So intuitively it’s the money you would have when where were no taxes minus the money when the investment is taxed all this divided by the no-tax accumulation minus the basis you started with. And Ali is correct gamma(LC) = gamma(DC) - 1