question 12
why do we divide 1.0231 by 1.05 when we are converting from dollar to EURO.
Why is it that we divide by the EURO RFR and not the DOLLAR RFR
I think you are talking about this … from S2000’s site …
http://financialexamhelp123.com/pricing-currency-forwards/
http://financialexamhelp123.com/valuing-currency-forwards/
S and F are expressed as PC/BC (Price / Base)
Vt = S/(1+rbc)^(T-t) - F / (1+rpc)^(T-t)