could we combine covered and uncovered interest parity formula and claim Forward Rate * Expected Future Spot Rate = Current Spot Rate Squared What exactly is this Forward rate? Am I going nuts?
I think you are you can mathematically claim that but what is the economical sense of the current spot squared? in theory it would tell you that forward = expected if IRP holds but you already know that
actually, I was wrong. covered interest rate parity: direct quote uncovered irp: indirect quote Just figured out.
it’s the same formula basically just freaking schweser decided to change the type of quote if you put indirect in direct for uncovered you’ll see it’s the same thing. it’s just a different concept.