Hi, In Economics they say that Ft = So x ( (1+ra **x** (Days/365)) / (1+rb **x** (Days/365)).

And in Derivatives they say: Ft = So x ( (1+ra **^** (Days/365)) / (1+rb **^** (Days/365)).

They do give different answers. Am I missing something here?

Thanks for the input!

In Econ they assume that the risk-free rates are quoted as nominal rates.

In Derivatives they assume that the risk-free rates are quoted as effective rates.

Thatâ€™s the only difference.

As far as I know there are different conventions. FRAs and Swaps for example are generally expressed with the x (Days/360) instead of raising to the power of. Hence, one method takes compounding into account and the other does not. As periods are usually small, effect is negligible.