LOS 66g Ex-Post return on the bond = Expected return ( domestic ccy) + real appreciation. I am unable to understand whether the real appreciation is in Domestic Ccy or Foreign currency? Portfolio management seems to be the most complex topic to me… do you all feel the same?
I think the note is wrong in this equation. It should be nominal appreciation in domestic currency.
jus take it as ex post return equals the interest rate in foeign land plus the foreign currency appretiation
sgkhade is correct . Both terms , when positive , add to ex-post ( realized) return on investment .
thanks all for responding. I understand that Ex-Post return = Foreign Interest rate + Foreign ccy appreciation, but In schweser its also mentioned that Ex-Post return on the bond = Expected return + real appreciation. Can someone explain what currencies are to be used here? Expected return seems to be in domestic ccy, what about real appreciation. Viva, are you sure that its Expected return + nominal appreciation in domestic ccy?