On page 38, in 3rd paragraph, it say RDC simply combines the third factor (Change in price due to benchmark yield) and fifth factor (change price due to currency value changes). This do not seem right. Why it not include all 5 factors from decomposed equation on page 6?
Then blue box 15 solve for RDC. We can see for this question the expected return includes rolldown, Change in price due to benchmark yield and change price due to currency value changes. Question have no coupon so that is zero. But I think, if coupon exist, then it should include as well.
They give approximation in question too which includes all the variable i put above. I confused.
Does RDC include all 5 variables?