First off, do we just assume in this question that we are a swedish investor?? because it says "valuation and performance analysis is done in swedish kroner?? This is the only way I can make sense of the currency contribution question then. (SKR return on us stocks is 17% and dollar return on US stocks is 30% therefore since we are 50% invested in us stocks, this would be a portfolio currency contribution of -6.5%
Base Currency = Swedish Kroner so your Swedish today
im trying to put this in lamens terms. Is this therefore saying "you are a swedish investor who owns us stocks. In SKR you made 17%, but the local/us/ return when transferred at the exchange rates given , returned 30%, therefore this means that since SKR appreciated relative to the us dollar from skr6/ to skr5.4/$, THE SWEDISH INVESTOR WAS HURT ON HIS US INVESTMENT SINCE THE HOME CURRENCY SKR APPRECIATED??? SO 17% SKR RETURN ON US STOCKS- 30% DOLLAR RETURN ON US STOCKS IS A -VE13% CURRENCY CONTRIBUTION OF THE US INVESTMENT???
Yes Local = $ and Base = SKr
Hey wil, thanks for the response. So does this work exactly in the opposite as well? I.e lets say our USSTOCKS in skr (home) stays same at 17%. (702,000skr/600000skr)-1 So taking the opposite approach, lets say that instead of above where SKR appreciated (from skr6/ to Skr5.4/)… we say that SKR Depreciated relative to dollar… (from skr6/ to Skr10/) Therefore our us stock portfolio in dollar terms is (702,000/10)/(600000/6)-1 = -30% So we would say in this case that our currency contribution was “47%”??? Is this correct?