In the CFA text in economics, we were told that thew forward exchange rate is:
((1+f)/(1+d))*S
However, to calculate the forward exchange rate in the derivatives book, we seem to be doing the reverse i.e.
((1+d)/(1+f))*S
I don’t understand why these formulas are different, can somebody please explain?
Thanks,
((1+f)/(1+d))*S
However, to calculate the forward exchange rate in the derivatives book, we seem to be doing the reverse i.e.
((1+d)/(1+f))*S
I don’t understand why these formulas are different, can somebody please explain?
Thanks,