In Figure, we provide stock market returns in both local and dollar-denominated terms. Which of these is more relevant? What does this have to do with whether the foreign exchange risk of an investment has beenhedged?

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12.7 9.2 Finland Japan Ireland New Zealand Germany 9.3 12.9 9.4 51.7 21.9 26.6 22.6 28.0 0 Ita 43.4 U.K. France Denmark Canada Australia Netherlands Spain Norway Hong Kong Taiwan 27.7 33.3 37.1 32.8 57.4 76.8 37.0 43.0 6 45.1 40.6 88.6 55.6 60 60 80.2 5.7 0 10 20 30 40 50 6070 80 90 100 Return (in local currency) Return in US.$)