Sorry to be THAT guy, but was just curious on what the credit risk on the SHORT end of a forward contract. = Forward / (1+d)t - spot / (1+f)t Just want to make sure that I don’t have my exchange rates mixed up. Thanks in advance!
Just calculate the long position always. If the value is negative in the long it is positive the short. Then you never need to worry about making a mistake :). The less things I can error on the better.
Yeah thats true, I am not thinking straight. I’ve been summarizing my notes for the past 4 hours on everything I am not 100% on. I think you might be able to see the progression of my questions throughout the study sessions 
btw how did you find Paraguay CFAI 2010 AM and 2011 PM CFAI Mock? I am doing them tomorrow as my last “practice game” before the big match on Saturday. Just the difficulties, don’t spoil it for me!
2010 was one of the easiest for me. 2011 Mock was fairly straightforward. AMC questions after actually having read it (the AMC that is) went well. It was pure memorization.
Would one of you mind sending me the mock exam please? Could use the last minute practice: veritgo17@gmail.com Thanks
Soccertom9 Wrote: ------------------------------------------------------- > Sorry to be THAT guy, but was just curious on what > the credit risk on the SHORT end of a forward > contract. > > = Forward / (1+d)t - spot / (1+f)t > > Just want to make sure that I don’t have my > exchange rates mixed up. > > Thanks in advance! Yes that is correct but be careful for the ‘t’ and the foreign currency notation that it is DC per FC. There was an exam question which t=0 despite the questions giving the risk free rates of the domestic and foreign currency. In that same question, the currency notation was FC per DC! I am sure many people fell for the trap if they just memorize the formula without understanding.
bell99 Wrote: ------------------------------------------------------- > Soccertom9 Wrote: > -------------------------------------------------- > ----- > > Sorry to be THAT guy, but was just curious on > what > > the credit risk on the SHORT end of a forward > > contract. > > > > = Forward / (1+d)t - spot / (1+f)t > > > > Just want to make sure that I don’t have my > > exchange rates mixed up. > > > > Thanks in advance! > > Yes that is correct but be careful for the ‘t’ and > the foreign currency notation that it is DC per > FC. There was an exam question which t=0 despite > the questions giving the risk free rates of the > domestic and foreign currency. In that same > question, the currency notation was FC per DC! I > am sure many people fell for the trap if they just > memorize the formula without understanding. So if it is DC/FC it is (Spot/1+Foreign) - (Forward/1+Domestic) If it is FC/DC it is (Spot/1+Domestic) - (Forward/1+Foreign) ?
Just as you said to me above, if they give you the improper notation on the currency, simply do the inverse and solve it the way we normally solve it 
I never knew it needed to be DC/FC. I will remember that.
Paraguay Wrote: ------------------------------------------------------- > I never knew it needed to be DC/FC. I will > remember that. It does not need to be DC/FC, the formula you gave two posts above looks good.