Remember to use the foreing interest rate and the foreign dividend yield rate in the synthetic equity index fund calculation .
See footnote 26 page 356 , Book 5
CFA may give both a domestic and foreign rate and you should have no doubt which to use.
Yes,
It says that if you hedge only the foreign asset risk then you will earn thr foreign ineterst
when you also hedge the domestic risk you earn the domestic risk free retrun…
I wrote above comment in context of managing the risk of a foreign currency denominated asset portfolio where if you hedge only the foreign asset risk you earn foreign risk free return & if you also hedge currency risk you earn domestic risk free return.
Jana, Your above point taken. Thanks for highlighting!