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The Hidden Risk Factor

DOI: 10.4236/jmf.2013.33A003, PP. 21-26

Keywords: Currency Risk, Risk Premium, Risk Factor, FX Hedge, Currency Overlay

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To achieve maximum returns consistent with an investor’s appetite for risk, the correct identification and estimation of all relevant risk factors in a portfolio are necessary. In this paper, we identify the role of foreign currency as an important risk factor from an international investor’s point of view.


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