Currency-free evaluation of investment results

S. P. Ladany

Omega, 1988, vol. 16, issue 4, 319-323

Abstract: In a non-stationary currency-exchange-rate environment, real investment results are obscured by the currency selected for reporting. To provide an equal-base comparison of all investment returns, irrespective of the currencies used for reporting, it is suggested that investment returns, expressed in a given currency, should be multiplied by an index related to that currency. The proposed index is the ratio of the sum of the weighted exchange rates in the base period, and the sum of the weighted exchange rates in the current period; the weights being the total national assets, amounts of foreign trade, or similar measures. The index measures the inverse of the investment return ratio in a non-earning situation in which the investment is distributed among the different currencies proportionally to the weights. Therefore, it is argued that the result measures the real return relative to this "opportunity investment return ratio." A numerical example is provided.

Date: 1988
References: Add references at CitEc
Citations:

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/0305-0483(88)90068-0
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:jomega:v:16:y:1988:i:4:p:319-323

Ordering information: This journal article can be ordered from
http://www.elsevier.com/wps/find/supportfaq.cws_home/regional
https://shop.elsevie ... _01_ooc_1&version=01

Access Statistics for this article

Omega is currently edited by B. Lev

More articles in Omega from Elsevier
Bibliographic data for series maintained by Catherine Liu ().