Interest rate parity

Dear :

in case of IRP: So x ( 1 + Rdcx60/360)/(1 + Rfg x 60/360) = S(E)

While Swap valuation FP = So + F/(1 + Rf) ^60/360

I noticed that when dealing with LIBOR , to adjust the rate for the period , they just use the annual rate multiplied with the ration of the year e.g 60/360. but in case of Swap, they don’t adjust the risk free this way but it is raised to the power ^60/360.

What is the rationale behind this ?

thank you so much

There are technical reasons for that, which you should not concern yourself with…the good thing is that there is very little difference between the two, so that you’ll get the right answer using any method.