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Hi,
I was wondering if you can explain why on some questions calculating the cost of equity using capm it sometimes includes the risk free twice and other times it only includes it at the start of the formula.
How am I meant to know if I need to include it once or twice.I am struggling on learning the four way to work out foreign hedges etc. Is there an easy way of learning or is it something I just need to memorize.
It would be a great help if you can answer the above queries and much appreciated
Thanks
Have you watched my free lectures, because I explain all this in the lectures? The lectures are a complete free course for Paper F9 and cover everything needed to be able to pass the exam well.
With CAPM it depends whether you are given the market return in the question, or whether you are told the market premium. (The market premium is equal to the market return less the risk free rate).
With regard to foreign exchange risk – again this is covered in detail in my lectures and I cannot type them all out here 🙂 (But appreciate that calculations are only asked on a few of them in F9 as is explained)
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