When doing this question I used Rdc = (1+Rfc)(1+Rfx) -1 and the guideline answer used Rl + (id-if) which is an approximation. Would I get full credit for coming to the same conclusion using the first formula?
No. Hedged return is Rl + (id-if) and unhedged return is Rdc = (1+Rfc)(1+Rfx) -1. We are not using this unhedged formula here as we are already given the forecasted spot rates and can directly calculate the unhedged returns from there.
And, honestly, you probably would get full credit if you compared only the hedged and unhedged currency returns (as the return on bond in the foreign currency is the same, so it drops out).
I also did this as part of my answer so I gave myself the points
Do we have a similar example in the book for the Question? Feel hard to relate to the material for this one and part C
This questoin is marked as not relevant on the IFT sheet. Can we just agree the IFT sheet is crap now?