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| Tekijä: | |
| Otsikko: | Currency-free evaluation of investment results and the R index: An addendum |
| Lehti: | Omega
1994 : SEP, VOL. 22:5, p. 535-536 |
| Asiasana: | CAPITAL INVESTMENT EVALUATION INVESTMENT CURRENCY MARKETS |
| Kieli: | eng |
| Tiivistelmä: | Ladany shows how managers may obscure foreign exchange risk through the selective choice of currency for reporting. He then proposes a solution: first compute an index L, which is the ratio of the sum of the weighted exchange rates in the base period. When L is multiplied by investment returns in a given currency, one arrives at a performance measure R that is free of exchange rate bias. The purpose of this addendum is to demonstrate that while the Ladany R index can provide a measure that disentangles exchange rate changes from real portfolio performance, it is not the best measure, and in certain circumstances will provide a distorted view of a company's performance. |
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