The return and variance of return to a U.S.dollar investor from investing in individual foreign security i are given by:

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The given formula for return to a U.S. dollar investor includes a currency exchange rate component 'e'. Therefore, the return is a combination of both security return and currency return. Option A only accounts for the security return and does not include the currency return. Option B only includes the sum of security return and currency return but does not factor in the impact of covariance between them. Option C considers both security return and currency return and also includes the impact of covariance between them. Therefore, Option C is the best choice.

The Return and Variance of Return to a U