Looking for some clarity here. I am studying using Kaplan/Meldrum w/ CFAI problems.
The mark to market formula for a Forward seems straightforward.
For Kaplan - (FPt-FP)(contract size) / (1+R(days/360)) = Vt
FPt = Forward price at time t in the market
FP = Forward price specified in the contract @ inception
R = rate of price currency
Vt = value of forward at time t
For CFAI/MM - (FP - FPt)(contract size) / (1+R(days/360)) = Vt
Notice the difference in FP and FPt…it seems like Kaplan is referencing BUYING the base. CFAI/MM is referencing selling the Base?
In other words, when you buy the base, its FPt-FP and when you sell the base, its FP-FPt? I haven’t seen a clear rule outlined in either text for this.