It is sometimes asserted that investors who hedge their foreign currency bond or stock returns remove the

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It is sometimes asserted that investors who hedge their foreign currency bond or stock returns remove the foreign exchange risk associated with the investment, reduce the volatility of their domestic currency returns, and thus get a “free lunch” because the mean return in domestic currency remains the same as the mean return in the foreign currency.
Is this true or false? Why?

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International Financial Management

ISBN: 978-0132162760

2nd edition

Authors: Geert Bekaert, Robert J. Hodrick

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