In a recent year, the Brazilian market was up about 150 percent, but the currency adjustment for U.S. investors was negative (83 percent), leaving a U.S. dollar return for the year of approximately 67 percent instead of 150 percent. On the other hand, the Japanese market enjoyed a 47 percent return, and the currency adjustment was positive, 15 percent, resulting in a U.S. dollar return of approximately 62 percent for the year. (See Equation 6-4 for the exact return formula for these two calculations.)

Equation 6-4

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= [(₁ + Return in domestic terms= ending value of foreign currency beginning value of foreign currency. 1 + REA) X- -1.0 (6-4)