according to books, it told the formula of no arbitrage forward rate is ( forward rate(A/B) / spot rate(A/B) ) = ( 1+interest rate A / 1+interest rate B ), but i check out this formula , it should be = ( 1+interest rate B / 1+interest rate A ). i examine it with wikipedia formula. and the result is the same as i though. so what do everybody else think ?

the formula in wikipedia is ( forward rate / spot rate ) = ( 1+interest rate domestic / 1+interest rate foreign )

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wait wait this doesnāt make sense to me
the way the CFA curriculum defines currencies are that they are quoted as A/B where currency A is the base meaning that mathematically A is in the denominator. So when that is the case, it should be = ( 1+interest rate B / 1+interest rate A ), which what I assume is the confusion.

Do you guys know when A/B is meant to denote that A is the base ccy and when itās supposed to denote that B is the base ccy? It seems to flip around, unless im missing something

In fact, thatās not how they quote them. When they write BGP/EUR 0.8587 they mean that GBP 0.8587 buys you EUR 1.0; GBP is the price currency and EUR is the base currency.

Ohh Iām sorry I think I understand my confusion, didnāt realize that the placement of the ratio number (before or after the currency pair āA/Bā) mattered in convention, which was tripping me up. But makes sense to me now. Thanks a lot for the help!

Taking nothing away from anybody and adding in another vote of thanks to the magician - this is precisely where I urge everybody and advocate all to abandon the formula thing. If your motto is to āmemoriseā formula and somehow get over the hump then let me assure you you may pass your CFA ā¦ eventually but you will never enjoy let alone internalise it.

Itās a beautiful journey for the experienced pro and the uninitiated newbie. Donāt merely look at it as 3 exams. I never did.